FACTA, GLBA, HIPAA, and More: Which Data Disposal Laws Apply to Your Business?

When it comes to handling sensitive business information, knowing which laws apply can feel overwhelming. From customer data to employee records, businesses must comply with a variety of federal regulations designed to prevent identity theft and protect privacy. Mistakes in data disposal are costly, not just in fines but in reputation.

FACTA, GLBA, and HIPAA are among the most important laws tied to data disposal, but they are not the only ones that may affect your organization. This guide breaks down which data disposal regulations may apply to different types of businesses, which regulatory bodies oversee them, and how secure shredding supports compliance.

FACTA and Consumer Report Information

FACTA, or the Fair and Accurate Credit Transactions Act, was passed in 2003 to combat identity theft and improve consumer protections. This covers businesses that use consumer reports for hiring, lending, tenant screening, or other business purposes. Under the FTC’s Disposal Rule, businesses and individuals are required to take measures to dispose of consumer information, including paper documents and electronic files that contain personal identifiers like Social Security numbers, account numbers, or credit card information.

Failure to comply with FACTA can lead to both civil and criminal penalties. The Federal Trade Commission (FTC) can impose fines of up to $50K+ per violation, and consumers may bring private lawsuits if their information is exposed due to negligent disposal. Businesses typically implement cross-cut shredding, secure storage, and certified destruction services, while keeping logs to document proper disposal.

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GLBA Rules for Businesses Handling Financial Information

The Gramm-Leach-Bliley Act, or GLBA, applies to financial institutions and any business that collects sensitive financial data, such as bank accounts, credit reports, or loan applications. It requires them to implement an Information Security Program covering administrative, technical, and physical safeguards.

The Safeguards Rule mandates employee training, controlled access to data, and secure disposal of records no longer needed. Standard practices include shredding documents, wiping hard drives, and permanently deleting digital files. Non-compliance can result in civil penalties up to $100,000 per violation, and executives may face criminal liability for willful failures. Documenting disposal and maintaining a chain of custody is critical for demonstrating compliance.

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Keeping Protected Health Information Secure Under HIPAA

The Health Insurance Portability and Accountability Act governs the handling of Protected Health Information (PHI). Healthcare providers, insurers, and business associates must comply with both the Privacy Rule, which defines patient rights, and the Security Rule, which establishes safeguards for electronic health records.

HIPAA requires secure disposal of PHI through cross-cut shredding, incineration, or permanent digital deletion. Violations can lead to steep penalties: civil fines range from $100 to $50,000 per violation, capped at $1.5 million annually for repeated offenses. Criminal penalties apply for intentional misuse, with fines up to $250,000 and up to 10 years in prison. Maintaining documented disposal processes helps demonstrate compliance and reduce liability.

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Other Major Data Disposal Regulations to Consider

In addition to FACTA, GLBA, and HIPAA, several other federal and state regulations may affect how businesses manage data:

• FERPA: The Family Educational Rights and Privacy Act protects student education records. Schools and educational institutions must take care when disposing of student information.
• State Data Breach Laws: Many states have their own data protection and disposal laws, which often include requirements for secure destruction of personal information. For example, California’s Consumer Privacy Act (CCPA) adds specific rules for businesses handling personal data.
• SOX: The Sarbanes-Oxley Act requires publicly traded companies to maintain accurate records and implement procedures for secure document destruction, particularly for financial reporting.

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Easy Ways to Protect Sensitive Data and Stay Legal

Here are some actionable steps to stay compliant with these data disposal regulations:

• Assess Your Data: Identify what types of sensitive information your business collects and stores.
• Implement Shredding Policies: Use cross-cut shredders or professional shredding services for documents no longer needed.
• Secure Digital Files: Permanently delete electronic files using certified data-wiping software or hard drive destruction.
• Document Everything: Keep records of shredding activities and certificates of destruction to prove compliance.
• Train Employees: Ensure all staff understand proper handling and disposal procedures for sensitive information.

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Secure Destruction Starts with Knowing the Rules

Regulatory bodies and state laws shape how your business handles data disposal, especially if you work in financial services, healthcare, human resources, or any field that stores sensitive customer or employee information. That is why secure destruction should not be treated as an afterthought. It should be part of a clear, consistent process that helps protect your business from unnecessary risk.

With Viking Shred’s professional shredding and secure data destruction services, we help businesses of all sizes maintain full compliance with federal and state regulations. Every document is tracked through a chain of custody, shredded to industry standards, and accompanied by a certificate of destruction, giving you proof that sensitive information is safely handled.

Partner with us today to safeguard your business, protect your clients, and simplify compliance.