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Minnesota and Vermont Looking into Shred Laws

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MINNESOTA: Several legislators and Attorney General Mike Hatch on Wednesday proposed what they called a 2006 consumer protection bill designed to tighten what they said are loopholes in safeguarding Minnesotans against identity theft.

Included among the proposals, which have occasionally met opposition from the business community for their potential cost, are new requirements for how businesses should dispose of records containing personal information of their customers.

The proposal would require businesses to burn, pulverize or shred many paper records and to destroy or erase similar electronic records.

It will also attempt to close the loophole exempting HIPAA and GLB covered entities from the law.

VERMONT: A task force of legislators and regulators in Vermont is nearing completion of their investigation designed to lead to a recommendation for state level legislation to fight identity theft. Among the recommendations is a requirement that businesses destroy personal information when it is discarded. The recommendation regarding destruction is very detailed and is primarily modeled after North Carolina’s shred law.

One fatal flaw in the Vermont regulation is that it will exempt any FACTA covered entity. Unfortunately, FACTA covers every person and business in the country and, therefore, it would technically exempt everyone. We don’t think that is what they wanted and hopefully, with some help from NAID, they will correct that.

Both the Minnesota proposal and the Vermont proposal contain the other usual provisions regarding notification and credit activity freezes.

By the way, the higher number of states that take such actions, the greater the likelihood of a federal law. The last thing the interest groups opposing the federal law want is 50 separate laws.