Customer data just goes out the door at bankruptcy auctions.
03/03/09
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CIO Magazine recently published an interesting article about the sometimes loose treatment of business and customer data in liquidations. It talks about improper disposition of sensitive customer data and the habit of trustees and liquidators of auctioning off computers without first scrubbing them of data.
This kind of problem certainly exists. I'm personally aware of one case where a weight-loss franchisee's employee threw customer records in the trash without shredding them first, and a reporter found them. This resulted in an investigation by the state attorney general's office. In another case, the data back-up disks for the debtor's on-line website were in a cardboard box, in a corner, and disappeared during the course of the furniture and equipment auction.
With a failing business, data controls are fairly important. One of the items on the checklist definitely has to be identifying both sensitive data (such as payroll information and consumer information) and key data (such as financial information and asset related data) and developing a plan to ensure such data is properly preserved or disposed of, as needed.
The article includes a quote by Michael Fleming, a friend of mine who practices technology law in Minneapolis. Way to go Mike.
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