The Identity Theft Resource Center lists more than 79 million records reported compromised in the United States in 2007—almost a fourfold increase from the nearly 20 million records reported compromised in 2006. The cause of the data breaches ranged in sophistication from the expert work of computer hackers to the negligent handling of sensitive information on the part of company employees.
So far 2008 looks a lot like 2007. There have already been major data breaches at some very recognizable companies such as MTV and T. Rowe Price. However, just because a business isn’t part of the Fortune 500 doesn’t mean it is safe from the risk of a security breach, and Better Business Bureau (BBB) wants small businesses to be prepared to handle a breach if the business’ or customers’ financial information is stolen.
“While breaches at major corporations make the news, many small businesses also find themselves victims of security breaches,” said Angie Barnett, president & CEO of BBB | Greater Maryland. “Sensitive financial information on both a business and its customers can be compromised by poor handling of computer or paper data or stolen by thieves and hackers, and small business owners must be prepared to respond quickly to lessen the damage done.”
Regardless of how a data breach occurs, responding quickly can help a business regain trust and retain its customer base. BBB offers the following steps and guidance for small business owners in the event they experience a security breach:
Currently, 39 states including Maryland, have laws that require customer notification in the event personal data is lost, stolen, or inadvertently disclosed, and these laws may expand to a national level soon. Many states require companies to notify their customers of any data breach. Other states require notification when harm to potential victims is likely. Even if the law does not require it, businesses should strongly consider the advantages of giving notice to customers whose information was compromised.
If a business chooses to inform customers about a security breach, it should:
- Describe the nature of the incident;
- Inform them what has been done to address the problem; and
- Advise them on what the company will do in the future to further reduce the chance of future security breaches.
Notify Law Enforcement and Other Authorities
If a breach occurs, it is important that the business alert appropriate law enforcement officials immediately so they can investigate the incident. This could include local police, state authorities, or even the FBI. BBB recommends that companies check with their legal advisors for counsel now, so that in the event a breach does happen, the business is prepared to contact the appropriate local law enforcement agency quickly.
BBB also recommends alerting the three national consumer reporting agencies: Equifax (www.equifax.com, TransUnion (www.transunion.com) and Experian (www.experian.com).
Businesses should also alert the bank or company hired to process payment cards. It’s important that the compromised accounts are watched or closed to prevent fraud from occurring on them. Unfortunately, businesses could be liable for any resulting fraud, so quick notification to payment card companies can help.
If a breach occurs, BBB advises that businesses:
- Encourage customers to monitor their credit reports for signs of identity theft. If a business can afford the expense, it should consider paying for a credit monitoring service for affected customers for a designated period of time (generally 6-12 months).
- Recommend that any customer experiencing or suspecting identity theft alerts the business, files a police report, and notifies the three national consumer reporting agencies.
For more BBB advice on ID theft prevention and for trustworthy advice on many other issues affecting small businesses, go to www.bbb.org.