Effective June 1, 2005 apartment firms, mortgage brokers, lenders and insurers must comply with new rules governing the disposal of consumer information that require them to shred or otherwise destroy personal information obtained to screen residents and employees.

The rules were adopted in November 2004 as part of the 2003 Fair and Accurate Credit Transactions Act (FACT Act) legislation that expanded the Fair Credit Reporting Act to help reduce consumer fraud and identity theft. Specifically, they require firms that use consumer reports, or information derived from such reports, to take "reasonable measures" to protect against unauthorized access to such data during disposal.

This includes credit reports or scores, employment background checks, residential records or medical history. According to the rule, "reasonable measures" are flexible and could include burning, pulverizing or shredding papers that include consumer information. They also require firms to destroy or erase electronic media (e.g., e-mail, computer files) with such information so it cannot be read or reconstructed.

This bulletin from the Federal Trade Commission provides more information on complying with the law.