|7/22/2005 – What do a hammer, a paper shredder and a $250,000 truck that can pulverize paper and metal have in common?|
They are just a few of the ways the Federal Trade Commission will allow businesses to comply with its new rules for disposing of consumers’ personal information as part of the Fair and Accurate Credit Transactions Act. The 2003 law is one of several moves by Congress to protect businesses and consumers from fraud and identity theft.
Since June 1, businesses have had to adhere to new FTC rules on destroying consumer records such as credit reports and financial data or face civil penalties.
GANNETT NEWS SERVICE Although small shredders aren’t recommended for business use, they still are effective for destroying personal documents at home.
The idea is to prevent “Dumpster diving” — in which criminals look through trash and discarded business files to obtain personal information on customers.
“When fully implemented, these provisions should help to reduce the incidence of identity theft,” said Howard Beales, director of the FTC’s Bureau of Consumer Protection.
The rules apply to both large and small organizations that use consumer credit reports in business transactions. Among those who must comply are banks, car dealers, employers, landlords and debt collectors.
While a paper shredder purchased at a local office supply store may do the trick, the FTC is allowing some companies who store data on computer disks to smash magnetic material or “pulverize it.” Many businesses are just turning to professional data management and document destruction companies.
“It’s been absolutely incredible, because we weren’t even here 10 months ago — and now we have 165 customers and a couple hundred thousand dollars in business,” said Mike Callihan, owner of Document Destruction in Cincinnati.
Cintas, a leader in the uniform apparel industry for several decades, entered the document destruction field three years ago and has seen sales grow to more than $40 million a year.
“The industry was growing before FACTA came in, but we’ve seen more activity now that these new rules are being put into place,” said Todd Schneider, vice president of Cintas’ document management division.
Shredding about 130 million pounds a year, Cintas is in 57 of the largest 150 U.S. markets and expects growth of about 30 percent annually, said Pam Lowe, corporate communications director for the Mason, Ohio-based company.
“Our margins in document destruction are about the same as uniforms, so it is doing very well for us,” she said. “It’s a $3.6 billion industry right now in the U.S., but we think it will grow to as much as $8 billion very soon.”
Schneider said the key to Cintas’ growth has been cross-selling with its uniform and safety sales people, as well as the company’s ability to purchase trucks with high-end shredders and other destruction equipment that can handle computer hard drives, CD-ROMs and other nonpaper items that store consumer data.
Cintas and other companies charge about $60 a visit. The Cintas trucks can destroy 4,000 pounds of paper per hour.
“These trucks cost $250,000 each, and they can handle just about anything that needs to be destroyed,” Schneider said. “We show up at the business, haul the documents in a locked container out to the truck and destroy it right on site. It doesn’t get easier than that.”
Dave Neiheisel, president of Joseph Automotive Group, one of the largest car dealerships in Greater Cincinnati, agrees. His employees handle customer credit reports, needed only as long as it takes to arrange financing.
“The best thing for us is that we see them shred it right there in front of our eyes,” he said. “I don’t want somebody taking it and saying they will shred it and it ends up in a landfill somewhere. Customers would never forgive me.”
Everyone is at risk for having their identities stolen — and if it happens, you could face serious financial consequences.
“Forty percent of those ID thefts are due to document loss such as stolen credit cards, stolen mail, or paper records retrieved from the trash,” said Chris Carleton, a certified financial planner and partner at the Asset Advisory Group.
The Blue Ash, Ohio-based registered investment advisory firm advises clients to:
n Shred any documents that you do not need that have Social Security number, account numbers or birth date.
n Shred monthly bills immediately after they are paid if those records can be accessed elsewhere. Other records should be kept for at least a year.
n Keep bank records for three years; tax returns and supporting documentation at least seven years.
n Use locking filing cabinets for most records. Estate planning documents, stock certificates, house and auto titles and other life documents ideally should be kept in a fireproof safe or safe deposit box.
n Consider professional commercial shredding companies that come to the residence.
n Mail bills at the post office. “When you put a red flag up at your home mailbox, that just notifies a criminal that important information may be inside,” Carleton said.
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