As companies fold, merge or experience massive reorganizations, there emerges an excess of unsupervised personally identifiable information (PII) – whether it be through former employees, surplus equipment or forgotten databases. Although every company has a legal obligation to destroy any sensitive data as part of their exit strategy, by the time an information leak has been discovered there may no contact information for the defunct company.
Consider the following distinct cases:
1) It was reported in January of 2009 that patients’ records for [now-defunct] Houston “Express EMS Services” was found in a parking lot and dumpster.[1]
2) Former employees of [now-defunct] L.G. Defelice Inc. had their Social Security Numbers posted on the web from improperly sanitized data retrieved from the DOT about the former company.[2]
3) The former NY United Hospital offered to make its records available to patients for six months while it was executing its closing procedure. As part of its exit process, the hospital prepaid a third party to store any remaining records for a period of seven years; upon which they will be destroyed.[3] The records are retrievable, but the only requirement for authorization is a signature; the verification of which is impractical.
4) Client records from a mortgage broker “Seaview Financial of Corona del Mar” were found in a recycling bin during the company relocation in February of 2009.[4]
5) A large consumer electronics firm, upon exercising its exit strategy, considered two alternatives for data disposal: electronic wiping or physical destruction of storage. (It was found more cost effective to physically destroy the disk drives.)[5]
And the list goes on and on… perusing “DataLossDB.org” will give one nightmares on the inefficacy of data protection in the real world. The fact that the volume of incidents is large enough to be aggregated by industry, breach type, and information type is a disturbing indication on how extensive the problem of information leakage is.
The Perfect Storm
This economy has created a “perfect storm” for identity fraud to thrive and grow.
Given three straight fiscal quarters of economic downsizing, the probability increases that companies which succumbed to the economic crisis will inadvertently fail to properly dispose of their sensitive data.
As the unemployment rate reaches record proportions, the propensity of identity misuse – even something as simple as parents using their children’s SSN to get more credit – increases as well. (A study in 2008 found approximately 5% of families surveyed had children with compromised identity information[6].)
From a market perspective, higher unemployment means the quality of current identity data decreases, poisoning the supply chain. As a consequence, the price of PII drops dramatically, so quantity needs to increase to maintain the present market levels.
Law and Responsibility
There are many regulations and guidelines specifying the protection and proper destruction of sensitive information.
Some legal experts believe more specific regulations are detrimental and that bankruptcy courts should address the interpretation of existing regulations with regard to data protection extensions.[12]
The Sedona Conference – a consortium of legal experts – has created “Best Practice Guidelines & Commentary for Managing Information & Records in the Electronic Age”[13]. This guideline is followed by many legal professionals; and provides an ideal platform to specifically address these post-mortem data protection issues from a legal perspective.
The Reality
Most of the executives interviewed were not aware of any regulatory requirements for post-operational retention/disposal of data in their industries; although some were aware that their companies do have such plans and others have even exercised such plans with former employers.
Looking into the problem more deeply, the root cause comes down to human error in three distinct ways:
1) Lack of awareness or identification of sensitive information by employers, employees, vendors, clients and end users.
2) Explicit negligence to follow proper information protection and disposal procedures; where operational efficiency outweighs privacy rules and regulations.
3) Failure of technology to classify and protect electronic information by both technology developers as well as users.
We need to be aware of how information affects each and every one of us:
As keepers of the information: The information protection priority for every CIO (or CPO) should always be effectiveness before efficiency.
As users of the information: Every employee has an obligation to protect client information as well as ensuring their own PII is well protected and supervised.
As owners of the information: As vested clients of various financial, medical and other institutions, we need to reach out and request the formal policies for data retention and destruction. As with the case of
The National Association for Information Destruction (NAID) provides a checklist for ensuring your company complies with the maximum set of regulatory requirements[14].
In Summary
Although very few regulations explicitly address post-operational conditions, there is an interpretative factor with any regulation that defines specific schedules for data retention and disposal:
Are records retention/disposal requirements in effect beyond the life of the organization?
There is no clear answer to this question. For records that transcend a company’s purpose – medical record being the most obvious example – there needs to be better data retention policies. Conversely, for consumer data that is only relevant to the operations of a company, common sense dictates the disposal of this information at the proper time.
Hence, we need a robust Information Lifecycle Management (ILM) initiative.
[3] References:
o http://www.allbusiness.com/health-care/health-care-facilities-nursing/10635002-1.html
o http://www.ironmountain.com/records/release/NYunited.asp
o Interview with
[4] References:
o http://www.ocregister.com/articles/information-seaview-files-2316272-center-recycling
[5] Interview with CTO [person’s name removed by request] from [company name removed by request].
[9] Reference: http://www.ftc.gov/opa/2005/06/disposal.shtm
[12] Reference: Interview with legal experts [names withheld by request].
[14] Reference: http://www.naidonline.org/facts.html
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