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  • Data Destruction Companies Watch Demand Grow As State Regulations Get Tougher

    Posted on April 14th, 2009 admin No comments

    Boom Time for Shredders

    Identity theft hurts consumers, and it can cost companies that have put private data at risk thousands of dollars in fines.

    But the problem has sprouted a growing industry — information destruction — that continues to move forward even though the economy has turned sour.

    In central Ohio, roughly a dozen companies are certified in the industry, which includes shredding tons of paper and electronic devices, and wiping information from computers and other electronic equipment.

    Established companies in the information destruction industry are growing an average of 10 percent to 25 percent each year, said Tim Oberst, president and chief executive of Ohio Mobile Shredding and president-elect of the National Association of Information Destruction.

    The organization went from 180 members in 2002 to 1,150 this year, but it doesn’t track sales figures.

    “As people become more aware of the need for information destruction, and as the regulations get tougher, they’re paying a lot more attention to it,” said Robert Johnson, executive director of the association. “Demand for information destruction services will continue to grow.”

    Reasons for that demand include more technology turnover and an increase in the enforcement of regulations to properly destroy documents, Johnson said.

    “In the last year and half, there has probably been $3 (million) to $4 million worth of fines,” Johnson said.

    In Ohio, there have been two recent cases where companies have been accused of improperly discarding information.

    Last December, the Department of Commerce filed a complaint against a mortgage company accusing the owner of abandoning hundreds of customer records when he went out of business.

    Another notice was filed in October against a Cuyahoga County mortgage company for a similar incident.

    Department of Commerce spokesman Dennis Ginty said that because of the distress in the housing market, mortgage brokers are going out of business and some simply abandon their records after they close their offices.

    “We are very concerned about possible identity theft and want to make sure that all customer personal information is protected,” Ginty said.

    Oberst, of Ohio Mobile Shredding, said his company was the first of its kind in Columbus in 1987, and he has watched the business boom since then.

    “The industry started to grow to the point where it became an ‘industry,’ ” Oberst said.

    It was tough to sell shredding services when he started out because businesses weren’t particularly concerned, Oberst said.

    “Most businesses would say, ‘What do you have to shred? We don’t have anything confidential,’ ” Oberst said. “Their attitude was out, ‘of sight, out of mind.’ ”

    That’s changed.

    “It’s like an everyday thing that has to be taken care of,” Oberst said.

    CareWorks, a managed-care organization for workers’ compensation, is one of Ohio Mobile Shredding’s customers. It ships 16 to 18 96-gallon barrels of paper to the company every two weeks, said Dave Gran, the facility manager.

    “That personal, confidential documentation has to be destroyed in a certain manner,” he said.

    Mobile Shredding does both paper-shredding and product-destruction — which can include anything from ID badges to hard drives.

    “From my perspective, if a company really wants to be sure the information isn’t left on the hard drive, we recommend physical destruction,” Oberst said. “The little money you get from reselling a hard drive is not worth the risk.”

    Hilliard-based Redemtech, a company that helps large corporations manage technology changes and upgrades, uses a hard-drive overwrite program to destroy the data on its clients’ computers.

    The overwrite program puts a data pattern over top of the original information, thereby obliterating it, said Redemtech president Bob Houghton.

    “If part of your objective is to preserve the financial value of the assets, if you can preserve the hard drive, it really helps,” Houghton said.

    Redemtech handles e-waste — used electronics ranging from computers to cash registers. It erases hundreds of thousands of hard drives a month, Houghton said.

    The company generally tries to refurbish and resell items for clients, so it puts an emphasis on inventory control to make sure no data is preserved.

    “Every single gram of material that moves through the plant is accounted for, particularly data-bearing devices,” Houghton said.

    With states adding regulations on top of existing federal laws, Houghton said many corporations are becoming more concerned about data destruction.

    “It’s good because it means increased consumer protection and less chance of identity theft,” Houghton said. “It’s really tough for a corporation to make sure they’re complying across all the jurisdictions they may be doing business in.”

    Redemtech’s customers include national banks, top insurance companies and health-care organizations, Houghton said.

    Clients now request extra rigor in overwriting data — for example, a company that in the past only wanted one overwrite pass now might ask for three, Houghton said.

    “This is simply to ensure there is even less chance that any data is going to be left in a readable state on the hard drive,” he said.

    Whether it’s through data overwrite programs or simply shredding documents, proper disposal of personal information is becoming more important as concern over identity theft rises.

    “The consumer has become more aware their information is in so many places and they have no idea how the company is protecting it,” Oberst said.



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