Shred Alert

Inside the business of personal-data destruction

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Right now there are more than 150,000 used smartphones, tablets and laptops for sale on eBay. And in the hands of a hacker, any number of them could reveal crucial data about a former owner--even after it's been deleted. "People think if they do a disk-drive reformat, there's nothing on it," says Rob Schafer, a tech analyst at the research firm Gartner. "That is a trivial thing to get around if you are a professional data thief." Or even an amateur, like the McAfee employee who made news last year (as part of an awareness campaign) by mining credit-card information from wiped laptops that he had bought on Craigslist.

Enter the data destroyers. In recent years, they've fueled a fast-growing industry: membership in the National Association for Information Destruction (NAID), the leading trade group, has increased by almost 1,100% since 2002, to nearly 2,000. The most modern firms, which cater largely to businesses, do way more than shredding and smashing: their machines and programmers scrub chips and drives so well that devices can be reused, resold or recycled without risk. One method, for example, involves coding over a scrubbed hard drive three separate times.

The price of erasure can add up. Iron Mountain, a major firm in the field, charges $2 to $10 to wipe a device. (Casual consumers can use software like Darik's Boot and Nuke for PCs, which is free but doesn't guarantee results.) However, not shelling out can be even costlier. A March 26 revision to the Health Insurance Portability and Accountability Act levies hefty fines on health care providers that allow leaks. Meanwhile, the FTC logged 369,132 identity-theft complaints last year, up 32% from 2011. Because of all that, Robert Johnson, CEO of NAID, believes the U.S. is probably within "a couple of years" of enacting an overarching data-protection law.

In the meantime, many companies and individuals still choose the smash-'em-to-smithereens route. "There's a very satisfying, almost bittersweet feeling, watching your data go away," says Tobi Innerfield, president of Quality Shredding in Deer Park, N.Y., which has an observation window. "You can see it on the owners' faces."