Which statement is true about FACTA’s overall purpose?

• A. FACTA only applies to banks.
• B. FACTA does not require consumers to take action for fraud alerts.
• C. FACTA imposes penalties on consumers.
• D. FACTA imposes identity theft protections such as fraud alerts, free reports, and record disposal safeguards.

Answer: (D)

FACTA is about strengthening protections against identity theft and tightening how consumer information is handled. It extends duties beyond just banks to include credit reporting agencies and data furnishers, focusing on preventing identity theft and improving access to and disposal of sensitive data. The protections it creates include allowing consumers to place fraud alerts on their credit files, providing free annual credit reports, and requiring safeguards for disposing of records that contain personal information. Those elements—fraud alerts, free reports, and record disposal safeguards—show its purpose to help detect and prevent identity theft and to reduce the risk of sensitive data being misused. The other statements miss the scope or mechanism: FACTA isn’t limited to banks; fraud alerts are typically initiated by the consumer; and the act does not impose penalties on consumers.