The (Continuing) Tale of the Lost Tapes

 
 
By John McCormick  |  Posted 2006-01-14
 
 
 

Right before Christmas, ABN AMRO Mortgage and Marriott Vacation Club International sent their customers a nice little present—news that they had lost backup tapes containing their names, Social Security numbers and other personal information.

The Marriott subsidiary, which handles vacation time-shares, did not say how the tapes were lost and said it was too soon after the event to talk about what steps it would take to prevent a similar incident.

An ABN AMRO spokesman I contacted did not answer my request for an interview, but, according to various accounts, a tape was somehow misplaced in November while in transit between a data center and a credit bureau. The shipping label on the package that contained the tape apparently fell off, according to the Detroit Free Press, and the envelope was sitting for weeks in a courier's shipping hub. The tape was eventually found—a couple of days after the company sent out letters to its customers informing them that the tape was lost.

These incidents are just the latest in a series of tape mishaps. Last year Ameritrade, Bank of America, Citigroup's consumer finance unit and Time Warner reported misplacing tapes. Many of these incidents made the business pages and the evening news.

It's hard to imagine, with all the publicity surrounding these events, that a company at the end of 2005 wouldn't have taken every precaution to secure its tapes. All year long, there were magazine articles, research reports and tip sheets from the experts on how to secure tapes—everything from putting tracking devices on the tapes to eliminating tape shipments in favor of electronic file transfer.

But what should companies really be doing to protect themselves? Experience might offer the best lessons.

Ameritrade lost a package containing four tapes in February 2005. The package, which was being shipped by a courier service, was damaged in handling and the tapes fell out. Three of the tapes were found in the shipper's facility, but the fourth, which contained records on 200,000 customers, still hasn't been located and is presumed destroyed.

This was just one of about 7,500 tapes the online stock trading company ships in a year.

But, says Ameritrade CIO Jerry Bartlett, that was one too many.

Bartlett said that after the tapes were lost, Ameritrade put everything under lock and key—literally. Immediately after the incident, no tape left a company facility without being in a locked box attached to an Ameritrade associate's arm, according to Bartlett.

The company also launched a top-to-bottom review of how it handled its computer tapes and made significant changes to its processes and procedures.

Before the accident, Ameritrade didn't encrypt its tapes. But it now applies robust data-scrambling techniques that include the use of two-key encryption—which means it takes two sets of codes, on either end of the distribution channel, to unscramble the records.

The company has also merged its physical- and information-security staffs; they now operate as a single team to secure its data and data centers. And the company has moved away from traditional package shipping companies and now uses trained personnel to move its tapes. Ameritrade is also exploring a shift to electronic-records transfer for some of its remote sites.

"It is not cheap," Bartlett says. "But our view is, first and foremost, we have a responsibility to protect our clients' assets and their information. So we view it as a cost of meeting our commitment, a cost of doing business."

Companies like Ameritrade that were the first to go public with a lost tape didn't have the advantage of being able to learn from other people's mistakes, nor did they have at their disposal the wealth of information on tape security that's available today. Ameritrade, however, is now doing everything it can to make sure it never loses another tape.

Unfortunately, year-end events clearly indicate other companies aren't doing the same.

John McCormick
Editor-In-Chief