When a company folds, who guards the data?

The economy is casting many companies by the wayside, and raising concerns that electronic records with personal and confidential data are not being protected.

"Certain companies have been disposing of records containing sensitive consumer information in very questionable ways, including by leaving in bags at the curb, tossing it in public dumpsters, leaving it in vacant properties and/or leaving it behind in the offices and other facilities once they've gone out of business and left those offices," Jacqueline Klosek, a senior counsel in Goodwin Procter's business law department, told CIO.com.

She noted that company computers containing personal data are finding their way to the auction block, often discarded with sensitive documents and data such as credit card numbers, Social Security numbers and driver's licenses numbers. Michael Fleming, chairman of the American Bar Association Business Law Section, Cyberspace Law Committee, told the magazine that a company that goes out of business is rarely hurt by the sloppy procedures.

"Rather, it's the other businesses that entrusted their data to the now-defunct company who may find they've failed to account for a contingency," said Fleming. He said companies that entrust their data to others should not presume that the law will fully protect them from the consequences of that other company's bankruptcy or insolvency.
 
For more on this flaw:
- check out this CIO.com article 

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