Privacy Rules Turn Shredders On

Every day, the Toronto financial planner's GBC Shred Master hums to life, slicing and dicing sensitive statements and client correspondence.

"I don't keep every statement that I have. Sometimes with transactions I have too many copies and so I shred what I need to. For me, its strictly security and compliance," said the burly 58-year old. His list of about 400 clients ranges from wealthy retirees to frugal teachers.

That's a big change from five years ago when the machine sat idle most days in his home office.

"When I first got it, I barely used it," he said. "Now, I am absolutely inundated with paperwork. It is never-ending."

Farrell is on to something. New privacy legislation -- and a liberal dose of corporate paranoia -- has made the paper shredding trade very big business. In the age of Enron and identity theft, conscientious paper management is hot.

"We have seen a significant increase in our business," said Ron Campbell, president and chief executive officer of Proshred Security International Inc. The Ottawa firm, which mulches everything from paper and computer hard drives to running shoes and tobacco, expects sales to climb about 30 per cent this year from 2003.

The National Association for Information Destruction, a Phoenix trade group with a name right out of George Orwell's 1984, reports that North American businesses and government coughed up about $1.5-billion in 2003 for shredding services. Sales are expected to rise a healthy 27 per cent this year.

The retail trade is booming too. Fellowes Inc., an Illinois office machine supplier, reported a 25-percent increase in paper shredder sales last year from 2002. Alex Nigro, a Markham, Ont., category manager at the Staples/Business Depot chain, notes that demand for shredders is up about 10 per cent in the past 18 months.

"The stuff is moving out of our stores," he said.

New Canadian legislation called the Personal Information Protection and Electronic Documents Act, effective Jan. 1, 2004, is driving the desire to mince and chop, industry sources say. The federal act sets ground rules for how the private sector collects, uses and discloses personal information. For shredders, the kicker is in the act's notes on retention: Businesses must "destroy, erase or render anonymous" personal data that are no longer required.

"In other words, once you don't need it any more, you should be getting rid of it," said Linda Drysdale, senior manager of the privacy practice at PricewaterhouseCoopers LLP in Toronto. Drysdale is a voracious shredder, destroying "pretty much everything that has my name on it."

While the legislation may have sparked demand for shredding services, a series of other factors are helping fan the fire. Images of papers billowing through Manhattan streets following the Sept. 11, 2001, terrorist attacks and the collapse of energy trading giant Enron a year later had "a dramatic effect" on paper trail security, Campbell said.

"Many companies had projects and procedures gathering dust on the shelf for a more comprehensive shredding program. All of a sudden boardrooms were funding them." Fear of identity theft through a misplaced pay stub or Visa credit card statement is an "overwhelming driver" too, said Craig Aris, director of marketing at Toronto's Shred-it International Ltd. The U.S. Federal Trade Commission reports fraud in the information age cost U.S. businesses about $50-billion last year.

"When your neighbor has their credit card number stolen and all of a sudden finds himself with $20,000 [on his card], it tends to hit home," Aris said. "There are a finite number of ways you can get rid of this information. Generally speaking, having a big bonfire in the back yard is not considered an environmentally friendly way of dealing with these issues." Toronto Globe & Mail