Putting Security in the Trash

Emerging legislation puts the onus on companies to manage paper records - and how they dispose of them



Do not forget to protect your company's paper records – and properly destroy the ones you don't need anymore! This is still one of the easiest ways to commit identity theft, yet one of the easiest to safeguard against.

In recent years, there have been many stories of electronic data breaches, including some that exposed the personal information of millions. With breaches as notable as these, sometimes the loss of hard copy information – paper – is forgotten.

The use of physical records to commit identity theft, purge a bank account, or access someone else’s credit card account is still a threat to anyone who receives a paper receipt for a purchase or provides documents containing personal information to another party. Consumers expect these records will be protected – or properly destroyed – by the businesses they trust.

Proper document destruction is finally on the front burner in at least one state. Texas Attorney General Greg Abbott has begun aggressively enforcing two Texas identity theft laws in an effort to crack down on businesses that fail to protect and properly dispose of consumers' personal information.

The Texas 2005 Identity Theft Enforcement and Protection Act requires businesses to protect customer records containing sensitive information, and to thoroughly destroy the records that are no longer needed. It allows for fines of up to $50,000 for each violation.

In addition, Chapter 35 of the Texas Business and Commerce Code requires businesses to store and dispose of customers' personal information appropriately and to develop retention and disposal procedures – upon penalty of fines as large as $500 per unprotected record.

To date, the state has taken legal action against five companies. In April, Abbott took action against CVS/Pharmacy and RadioShack for exposing hundreds of customers to identity theft by failing to properly dispose of records that contained sensitive information. One of these records allegedly belonged to a customer who had previously purchased a shredder to protect herself from identity theft.

In March, the Texas Attorney General filed enforcement actions against Jones Beauty College for improperly discarding student financial aid forms containing Social Security numbers and other personal information. It also filed an action against On Track Modeling, which allegedly abandoned more than 60 boxes containing hundreds of confidential client records.

In another case, Texas agreed to a temporary injunction against EXCORP, which was accused of discarding business records containing personal information in trash cans outside several of its locations. Abbott allowed EXCORP to implement an interim process that will protect sensitive personal and financial information contained in customer records while the Attorney General moves forward with the case.

What lessons can other businesses learn from the Texas cases? First, do not forget about physical records –- companies have a duty to protect these records and dispose of them properly. Second, educate your employees on the risks associated with improper disposal and train them on how to handle it the right way.

Third, if the burden for proper document disposal is too great, outsource the task to a third party that specializes in document destruction. And fourth, audit your practices. All of these policies, training courses, and shredders will do little good unless the company verifies that proper procedures are being followed and documents are being properly disposed of.

An important note: The Texas laws apply to electronic records as well, which means finding proper methods for destroying online data that is no longer needed. We'll look at this issue in the next column.

— Dr. Chris Pierson is an attorney with the law firm of Lewis and Roca LLP. Special to Dark Reading

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