Do you shred? If not, get ready to.

You've heard about shredding. You understand that it's probably a good idea to shred any receipts that have your credit card numbers or other personal information on them to stop identity theft. You may have seen shredders at the office or noticed bulging trash bags of thin paper strips in the dumpster when you're walking the dog past a local business at night. But now there's a law with a provision going into effect this summer that says if you employ even one person - a nanny, a yard man - and you have their personal information because you're doing the right thing and paying Social Security taxes, you have to "destroy" the information before you throw it away.

You have to shred it or burn it or pulverize it.

Or you could get sued. Or fined. Or become part of a class-action lawsuit by enraged nannies whose personal information has somehow gotten out. Bet you didn't know that. The shredder industry does, and it expects sales to go on a tear. Shredders are going to become "a household requirement as much as a washer and dryer," says Bob Johnson, executive director of the National Association for Information Destruction (NAID), a paper-shredding industry trade group.That's because one provision of the Fair and Accurate Credit Transactions Act (FACTA) - the law that also says you get one free look at your credit report each year - will mean an exploding industry will get bigger. "The reality is: People are afraid of their mail," says Tony Lammers, president of InnoDesk of Beachwood, Ohio. "They do really strange things to get rid of mail," he says. "They fire up the barbecue and burn it. They use the fireplace. Or they tear up their mail in little bits and pieces and run around the house putting a little bit in this trash can and a little bit in that trash can so that it won't all go out in the same garbage bag."

The fastest-growing crime

They have good reason: Identity theft is the fastest-growing crime in the USA, according to the National Crime Prevention Council. About 7 million people had their identities stolen in the year ended July 2003, according to two studies done by Gartner Research and Harris Interactive. Each will spend an average of $1,495 and 600 hours getting his or her finances straightened out, according to the Identity Theft Resource Center. And that's not counting lawyers' fees. Overall, the market for shredders, including big commercial machines that handle tons of paper at a time, is about $350 million a year, says Steven Jacober, president of the School, Home and Office Products Association in Dayton, Ohio. Revenue has been growing in the low double digits every year, he says. The main fuel now is the home and consumer market.

The Fair and Accurate Credit Transactions Act was passed in December 2003, but rules were written just recently on the disposal provision. The law requires the destruction - "shredding or burning" or "smashing or wiping" - of all paper or computer disks containing personal information "derived from a consumer report" before it is discarded. Joining the shredding game. That means that if you do a credit check on your nanny before you hire her - or you get private information from a nanny service that came originally from a credit report - you fall under the rules. The disposal provision goes into effect June 1. By then, all businesses - whether employing one worker or 1 million - will have to join the shredding game. "It's going to have a very big upside for people selling small shredders," says Johnson. "A lot of companies that did not comply in the past were the medium- and smaller-sized companies. They were busy running their business or felt they were flying below the radar screen. But now they'll have to comply. Every employer is covered, even individuals."

FACTA is just one of many recent laws aimed at protecting consumer and company privacy, including medical records, credit information and corporate trade secrets. Several states, including Georgia and Wisconsin, already mandate the disposal of records containing personal information. But the federal laws on protection of consumer information have some teeth in them.

If you don't shred and information gets out, there are penalties, according to NAID:

• Civil liability. An employee could be entitled to recover actual damages sustained if his or her identity is stolen as a result of your inaction. Or you could have to pay statutory damages of up to $1,000 per employee.
• Class-action lawsuits. If large numbers of employees are affected, they may be able to bring class-action suits and get punitive damages from employers.
• Federal fines. The federal government could fine you up to $2,500 for each violation.
• State fines. States can fine up to $1,000 for each violation.