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Tracy Hasper: Protect yourself from ID theft

It’s The Law

Posted: June 11, 2009 7:08 p.m.
Updated: June 12, 2009 4:55 a.m.
 

Like an Old Testament plague, identity theft has infected modern Western culture. What sometimes goes unnoticed is that businesses have become prime targets for identity thieves. Today, business owners face not only scam artists anxious to steal their business identities but also civil liabilities for failing to protect their employees' personal information.

As this outbreak unrolls, how can a business protect itself?

First, some facts regarding identity theft:

n A study released in February of 2008 by Javelin Strategy and Research, and cited by Sheyna Steiner in her Bankrate.com article, "The Costs of ID Theft," sets the price tab for 2007 at $45 billion. In Steiner's words, "the scope of the problem still scrapes the stratosphere."

n According to the Identity Theft Resource Center, 2008 saw a total of 574 breaches (illegal trespasses into personal information) of consumer data, for a total of 33,593,557 personal records swiped.

n The largest number of these breaches occurred at businesses. Businesses accounted for the illegal exposure of 5,705,628 records, or 35.2 percent of the total records stolen during 2008.

n Joseph Campana, writing on the Wisconsin Technology Network Web site (Sept. 19, 2006; wistechnology.com) indicates that "over half of the 10 million new IDTs (identity thefts) each year originate from a place of business.

How are businesses placed at special risk of identity theft? Two major risk categories arise: 1) vulnerability of losing personal data collected by the business; and 2) fraudulent use of a business identity.

First, businesses account for the greatest number of data breaches. ID thieves wield several weapons to steal business information.

Data breaches occur when company laptop computers are stolen (10,000 laptops were stolen during 2007 from U.S. airports), when hackers penetrate computer systems or when disgruntled employees pirate information internally. State and Federal laws demand that business owners protect consumers' (and employees') personal data. Violation of that trust can bring crippling fines.

Furthermore, a company that fails to protect consumer data can become the target of expensive liability lawsuits. Bottom line:

Businesses must carefully audit all security procedures for collecting, managing, and safeguarding data.

Second, ID thieves can create havoc with access to a company's Employer Identification Number (EIN). New accounts can open, existing accounts can be drained or unauthorized purchases can be made. Such violations not only cause financial losses, but inflict a fatal wound to a company's reputation.

What steps can businesses take to protect against this growing scourge?

Educate yourself and your employees regarding ID theft issues. The data your business collects, from employees, customers, and vendors, constitutes one of your most precious assets. Guard that data. Several excellent Web sites are: www.InsideIDTheft.info/; www.privacyrights.org; www.pogowasright.org; The Breach Blog, www.attrition.org; www.idtheftcenter.org; and the Federal Trade Commission Web site, (www.ftc.gov).

Third, audit your entire operation, from top to bottom, with security in mind. How is your information secured? Who has access to sensitive information? How much of the information you collect is truly necessary? How secure is your company's computer system from hackers?

Finally, contact your insurance representative immediately and request an explanation of what specific coverage in your policies applies to data breaches and identity theft losses.

As President Kennedy once observed, "The time to fix the roof is when the sun is shining."

Tracy Hasper, an attorney licensed by the State of California is the Director of Investigations at Batza & Associates, Inc. She can be reached at thasper@batza-associates.com. Her column represents her own views, and not necessarily those of The Signal. "It's The Law" appears Fridays and rotates between members of the Santa Clarita Valley Bar Association. www.SCVbar.org. Nothing contained herein shall be or is intended to be construed as providing legal advice.

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