Up Front -- Industry News

Recyclers Missing Out If Skipping Secure Destruction

Over the past several years the shredding and document destruction industry has grown in stature. The number of traditional paper recycling companies that have begun moving toward offering shredding and document destruction services has also grown.

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David Friedman,
Friedman Recycling

According to speakers at the Paper Recycling Conference & Trade Show, which was held in Atlanta in late June, for those paper recycling companies that haven’t made the move or have decided not to pursue this area, the future could be tough.

David Powelson, with Tri-R Recycling, Denver, stated, "For processors it is simple, you can learn how to shred or you can lose business."

In his presentation, Powelson pointed out that the shredding industry has become a growing part of the overall paper recycling stream. Less than 20 years ago, the fiber that was sent to recycling centers from shredding and document destruction companies was negligible. However, as the industry grows, so does the percentage of the shredded paper. This trend, Powelson said, is likely to continue in the future.

While on the surface it may seem like an easy step to go from a paper recycling to a shredding company, the reality is that it is very tricky. A host of obstacles await recyclers who may be considering expanding their business. For one, becoming a security business dictates that the company needs to establish a chain of custody. Also, hiring standards may need to be refined.

David Friedman, with Friedman Recycling, a Phoenix-based recycling and shredding company, stressed that security sensitivity "has never been higher."

At the same time, the shredding business is showing exponential growth. Yet it is still a very fragmented business, with more than 92 percent of all the companies having sales of less than $1.5 million, according to Friedman.

Shredding in and of itself isn’t necessarily the only service these companies should provide. Roughly one-third of companies providing shredding services also provide records retention services; another third provides recycling services; and another third are dedicated solely to shredding.

Friedman notes that large corporate clients are discontinuing office recycling programs and moving toward an all-shred policy because the liabilities and risks are so great. Thus, shredding companies will control more of the office grades demanded by certain types of paper mills. n

Kansas Company Building Plant

Jayhawk File Express has announced plans to construct a
records storage and document destruction facility on five acres within Franklin Business Park in Lawrence, Kansas.

The company, based in Topeka, will invest more than $1.2 million with the project and plans to create five new jobs.

Jayhawk File Express provides secure file management and storage and confidential document destruction to a wide range of clients in the Topeka area and is expanding to Lawrence because of the company’s growing clientele there.

Jayhawk provides services to law firms, health care and retirement facilities, government agencies, accountants, financial and banking institutions, architects, real estate agencies, engineers, insurance and title companies and other corporate customers. n

WSJ Carries Battle Report

A front page story in the June 14 Wall Street Journal details a legal battle between Iron Mountain Inc., Boston, and a former board director. The extensive feature relates the records management company’s legal battles against former board director Peter Pierce, who joined the Iron Mountain board after his own company was acquired by the publicly traded consolidator.

Iron Mountain contends that Pierce worked with family members and former co-workers to form Sequedex, a records management firm that attempted to compete with Iron Mountain in the records management business in the eastern U.S.

A lawsuit filed by Pierce contends that Iron Mountain invaded his privacy and used questionable tactics in its investigation of Sequedex and of Pierce’s alleged non-compete clause violations.

The feature notes an arbitrator ruled Pierce did not technically violate his non-compete clause, though the arbitrator cited aspects that "come close to a violation of the spirit" of the agreement.

The WSJ article notes that while Sequedex was unable to survive, Iron Mountain stock value has grown by 41 percent since the beginning of 2003, with Warren Buffett’s Berkshire Hathaway Inc. a sizable investor in the firm.

Drop-Off Shredding Service Now Nationwide

DataGuard USA LLC, Denver, Colo., has begun the nationwide rollout of its Shop ‘n’ Shred retail drop-off shredding service. The service targets 90 million households and small businesses.

"Ironically, it was a Supreme Court ruling that discarded trash belongs to the public domain that gave rise to not only the shredding industry, but launched identity theft into a higher orbit," Steven Hastert, vice president of operations and technology at DataGuard USA, says.

"Shop ‘n’ Shred (on the Web at shopnshred.com) is an online mapping service that guides customers to nearby collection sites where they can be assured their private information is destroyed properly. We offer convenience, savings and peace of mind."

Using Shop ‘n’ Shred’s online mapping service, customers are navigated to the closest drop-off site where a retailer collects a fee and then directs the customer to a secure shred bin in the store. The store representative never sees or touches the customer’s material. All shredding contactors are AAA certified by the National Association for Information Destruction, a secure destruction industry trade group based in Phoenix.

DataGuard’s Mike Tingle says the service has been in development for several years. He notes that the company has been getting positive feedback from the pilot program locations that it has set up. (For more on DataGuard, see "Beyond Shredding," Summer 2004 SDB.)

"The ideal retailers for Shop ‘n’ Shred are shipping stores, grocery stores, hardware stores, record storage facilities, folks who already perform background investigations in hiring employees," says Hastert. "We anticipate supporting about 4,500 such locations in North America."

The service’s Web site contains an exhaustive list of items considered "shreddable" by Shop ‘n’ Shred, including company unifroms, identification badges, magnetic media such as diskettes and disk drives, old check registers, microfiche, and all types of paper documents.

Tingle adds that there are a number of reasons for companies to consider adding the Shop ‘n’ Shred service, such as the incremental increase in revenue for companies using the service, the increased sales traffic for the individual stores; and the opportunity to create an additional revenue stream through the marketing of bins.

Businesses and consumers interested in obtaining additional information can go to www.shopnshred.com or call (800) 747-3365.

DataGuard USA LLC, a subsidiary of Tri-R Systems Corp. The company develops and promotes Internet-based marketing and security solutions for the burgeoning information and product destruction industry.

Company Provides Assistance on FACTA

A new service from ID Insight Inc., St. Paul, Minn., is designed to help financial services companies comply with recently enacted Financial Accurate Credit Transaction Act (FACTA) guidelines aimed at preventing identity theft, Adam Elliott and Bob Clark, the company’s founders, say.

President Bush signed FACTA into law late last year. Part of the legislation provides more protection against identity theft.

"Identity theft is a crime that has eluded the financial services industry for years," Elliott said. "Our new solution is based on research showing that nearly every case of identity theft involves an address manipulation."

The firm’s TakeOver Insight service will help financial services companies comply with Section 114 of FACTA, which requires an address validity assessment in the event of a customer-requested address change.

"Section 114 was written with account takeover in mind. These new provisions support what we know from research: that it is all about the address," Elliott says. "TakeOver Insight will help the financial services industry catch more thieves by identifying address change requests that are out of pattern, inconsistent with other information, or simply do not make sense."

TakeOver Insight is based on ID Insight’s patent-pending Address Differential (AD) Analysis—a blend of data and analytics designed to detect identity theft. The analysis produces the AD Score, which predicts the likelihood of fraud using a numerical rating system. The score directs fraud investigators to high-risk transactions, allowing them to act immediately to protect consumers and prevent serious losses.

U.K.’s Shredex Celebrates Its First Anniversary

A British entrepreneur is celebrating the first anniversary of his document destruction firm known as Shredex, crediting his success to security and the environment being high on today’s business agenda.

"Firms are much more environmentally aware these days and are increasingly looking for ways to recycle wherever possible," says Tim Cox, who set up the firm last year near Kenilworth, U.K. He has already increased his staff and is looking to further expansion at the end of this year.

"Traditionally, document destruction has been used to ensure reputation and commercial sensitivity is not compromised," he adds. "But with fraud on the increase, companies are paying much more attention to security than they were perhaps five years ago."

Shredex helps companies meet the requirements of Britain’s Data Protection Act by protecting the confidentially of clients’ or employees’ personal information up to the point of destruction by giant cross-cut machines. The company issues certificates of destruction to its customers before recycling material.

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August 2004
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