FTC Alert

Client Alert | 1 min read | 06.06.05

On June 1, 2005, new FTC regulations became effective which outline the duties of persons and companies when disposing of consumer credit reports and information derived from consumer credit reports. Although the new regulations stem from the Fair and Accurate Credit Transactions Act (FACTA), the ramifications are broader because the regulations apply beyond credit reporting agencies and lenders traditionally covered by FACTA, and require that virtually any business that uses consumer credit information take more rigorous measures in handling that information.

The language of the regulations is surprisingly straightforward. The disposal regulations apply to “consumer information,” which is defined as “any record about an individual, whether in paper, electronic, or other form, that is a consumer report or is derived from a consumer report.” This would include any company that uses credit reports for background checks in hiring decisions, credit checks on customers or vendors, or other business investigations which utilize consumer reports. Any person or entity that maintains this consumer information must properly dispose of it by taking “reasonable measures” to protect against unauthorized access or use of the information. Examples given are burning, pulverizing or shredding such information, and destroying or erasing electronic media containing such information. Given the prevalence of identity theft and the prominence of identity theft in the media, aggressive FTC enforcement is likely. In addition, and perhaps more importantly, private civil liability is a potential danger for violations. Although it is not clear whether a private consumer harmed by identity theft could sue directly for a violation of the new regulations, state laws, such as California's unfair business practices law, allow private consumers to “piggyback” on other laws, even laws that do not justify individual lawsuits. It is therefore in the best interest of any company that uses credit information to take a close look at the new regulations and develop a compliance program.

Insights

Client Alert | 6 min read | 03.26.24

California Office of Health Care Affordability Notice Requirement for Material Change Transactions Closing on or After April 1, 2024

Starting next week, on April 1st, health care entities in California closing “material change transactions” will be required to notify California’s new Office of Health Care Affordability (“OHCA”) and potentially undergo an extensive review process prior to closing. The new review process will impact a broad range of providers, payers, delivery systems, and pharmacy benefit managers with either a current California footprint or a plan to expand into the California market. While health care service plans in California are already subject to an extensive transaction approval process by the Department of Managed Health Care, other health care entities in California have not been required to file notices of transactions historically, and so the notice requirement will have a significant impact on how health care entities need to structure and close deals in California, and the timing on which closing is permitted to occur....