In 2026, regulators expect businesses to treat document destruction as a core part of their data security program — not an afterthought. While most organizations invest heavily in cybersecurity, many still overlook a critical compliance requirement: FACTA Disposal Rule compliance for physical records.
The Federal Trade Commission (FTC) enforces the Disposal Rule under the Fair and Accurate Credit Transactions Act (FACTA). Specifically, the rule requires businesses to take reasonable measures to protect against unauthorized access to or use of consumer information during disposal.
However, many organizations underestimate how easily physical records can expose sensitive data. If your company throws paperwork in the trash, relies on unsecured office shredders, or uses an unvetted vendor, you may be creating regulatory exposure and unnecessary liability.
So, what does the Disposal Rule actually require — and what should compliance look like today?
What Is the FACTA Disposal Rule?
The FACTA Disposal Rule applies to any person or business that maintains or possesses consumer information derived from a consumer report. In other words, if your organization touches credit-related data in any capacity, the rule likely applies.
This includes:
- Financial institutions
- Mortgage lenders and brokers
- Auto dealerships
- Property managers and landlords
- Employers conducting background checks
- Law firms and accounting firms
- Healthcare organizations that access credit data
If your organization uses consumer reports for credit, employment, insurance, or tenant screening purposes, the rule almost certainly applies to you.
Under FTC guidance, businesses must take reasonable measures to dispose of covered information so it cannot be read or reconstructed. For paper records, this typically means:
- Burning
- Pulverizing
- Cross-cut shredding
Simply placing documents in a dumpster, by contrast, does not meet compliance standards. Likewise, relying on strip-cut shredders may not sufficiently reduce reconstruction risk.
What Counts as Consumer Information?
Importantly, the scope of the Disposal Rule is broader than many businesses realize.
Covered information may include:
- Credit reports
- Background screening reports
- Social Security numbers
- Account numbers
- Payment histories
- Employment screening documentation
- Loan and credit applications
Even partial information can create identity theft risk if improperly discarded. For example, a document containing only a name and partial account number may still be exploited when combined with other publicly available data.
In today’s regulatory environment, identity theft prevention remains a federal priority. As a result, document disposal practices are increasingly viewed not as administrative tasks, but as core elements of risk management and consumer protection programs.
Common Compliance Gaps in 2026
Despite clear FTC guidance, many organizations continue to operate with disposal vulnerabilities. In many cases, these gaps are unintentional — but regulators do not distinguish between accidental and negligent exposure.
Office Shredders as the Primary Safeguard
At first glance, desk shredders may seem sufficient. However, they create several compliance issues:
- No documented chain of custody
- Inconsistent shredding practices
- Strip-cut output that may be reconstructable
- No certificate of destruction
- No verification or audit trail
Consequently, it becomes difficult to demonstrate that “reasonable measures” were taken. From a regulatory standpoint, the absence of documentation can be just as problematic as improper destruction itself.
Improper Trash Disposal
Similarly, records found in dumpsters remain a recurring enforcement issue. Once documents leave your physical control without secure destruction, exposure risk increases significantly. Moreover, dumpster-diving incidents often attract regulatory scrutiny and reputational damage.
Unqualified Service Providers
In addition, hiring a non-certified shredding vendor or junk removal service introduces third-party risk. The FTC makes clear that businesses must exercise due diligence when selecting service providers.
In 2026, vendor oversight is a central focus in audits, cyber insurance reviews, and compliance assessments. Therefore, selecting a shredding partner should be treated as a risk management decision — not merely a facilities expense.
What FACTA Disposal Rule Compliance Should Include
To meet FTC Disposal Rule requirements, your document destruction process must be structured, documented, and defensible. In practice, this means implementing controls that regulators can clearly evaluate.
1. Secure Collection
First, organizations should ensure secure internal collection, including:
- Locked shred consoles throughout your facility
- Limited internal handling of sensitive documents
- Clear written destruction policies
By reducing employee handling and standardizing procedures, businesses lower the risk of internal exposure.
2. Documented Chain of Custody
Next, secure handling between collection and destruction is critical. This should include:
- Background-screened employees
- Secure transportation vehicles
- Controlled transfer procedures
- Restricted facility access
A secure chain of custody significantly reduces risk during transport and storage. Just as importantly, it creates documentation that demonstrates compliance if questioned.
3. Verified Destruction
Destruction itself must be complete and irreversible. Typically, this includes:
- Industrial cross-cut shredding
- Immediate on-site destruction or secure transport to a monitored facility
- Recycling of shredded materials through verified downstream processes
In contrast to office shredders, industrial equipment ensures material cannot be reconstructed.
4. Documentation
Finally, compliance requires documentation. This should include:
- A certificate of destruction
- A service agreement outlining compliance standards
- Vendor certification documentation
If questioned by regulators, your organization must be able to show evidence — not assumptions — that secure disposal occurred. Without documentation, even proper shredding can be difficult to prove.
Why NAID AAA Certification Strengthens Compliance
Although the FTC does not mandate a specific certification, working with a NAID AAA certified shredding provider strengthens your compliance posture. Specifically, it demonstrates adherence to audited, industry-recognized security standards.
NAID AAA certification requires:
- Scheduled and unannounced audits
- Strict operational procedures
- Employee background screening
- Access controls and surveillance
- Ongoing compliance verification
As a result, compliance officers gain third-party validation that document destruction practices meet established benchmarks. In the event of an audit, investigation, or legal inquiry, this documentation becomes invaluable.
Recurring Shredding vs. One-Time Purges
Importantly, FACTA Disposal Rule compliance applies to both daily operations and large-scale cleanouts. Therefore, your destruction strategy should address both scenarios.
Recurring Shredding Programs
For offices that routinely generate sensitive documents, recurring shredding programs provide consistent protection. Locked containers combined with scheduled pickups reduce internal risk and create a documented compliance routine.
One-Time Purge Services
However, large-scale cleanouts require additional planning. One-time purge services are common during:
- Office relocations
- Records retention reviews
- Storage room cleanouts
- Mergers and acquisitions
Because purge projects involve high volumes of sensitive material, the risk of exposure increases. Consequently, secure purge shredding is essential to maintain compliance during transitional periods.
The Cost of Non-Compliance
Failure to comply with the FACTA Disposal Rule can result in:
- FTC enforcement actions
- Civil penalties
- Legal claims from affected individuals
- Reputational damage
- Loss of client trust
Beyond direct penalties, improper disposal can trigger broader investigations into your organization’s overall data protection program. In many cases, physical document failures prompt deeper scrutiny of cybersecurity and vendor management practices.
In 2026, regulators and insurers increasingly evaluate physical document security alongside digital safeguards. Therefore, businesses that neglect secure shredding leave a visible and avoidable gap in their compliance posture.
A Simple Compliance Test
Ultimately, compliance comes down to defensibility.
Ask yourself:
If regulators reviewed your disposal process tomorrow, could you provide documentation proving that consumer report information was securely destroyed?
If the answer is unclear, your process likely needs strengthening.
FACTA Disposal Rule compliance is not complicated. However, it does require intentional procedures, documented safeguards, and qualified partners.
Secure document destruction is not merely operational housekeeping — it is a regulatory obligation and a critical component of modern risk management.
Ultimately, the question is not whether your organization shreds documents — but whether your process would withstand regulatory scrutiny.
Is your disposal process audit-ready?
If regulators reviewed your document destruction procedures tomorrow, would your organization be able to demonstrate FACTA compliance?
Schedule a confidential document security assessment with our team to evaluate your current process and identify potential compliance gaps. Our NAID AAA certified shredding services are designed to help businesses maintain secure, documented, and defensible disposal practices.
