Are Your Borrowers Securely Disposing of Business and IT Equipment?

by: Smith and Howard

April 10, 2016

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Borrowers need to upgrade equipment to stay productive and competitive. But retiring these assets without following secure disposal protocol can be risky. Here’s an overview of what could possibly go wrong when a retired piece of equipment sits idle in a storage closet or garbage dump — or it’s returned to the leasing company.

Equipment disposal data security risks

A borrower’s equipment stores valuable information, including customer lists, financial statements, trade secrets, passwords, and personal information of employees and contractors. Unscrupulous competitors and identity thieves would love to get their hands on this information — and may be able to do so, if a borrower’s disposal protocol is lax.

Many borrowers erroneously believe that deleting files off the hard drive of a computer, tablet or smartphone — or smashing it with a sledgehammer — can prevent data theft. But tech-savvy thieves may find creative ways to retrieve the information.

What’s more, this data is stored by more than just technology-related equipment. Did you know that copiers, printers and advanced manufacturing equipment also contain hard drives that retain copies of all jobs they’ve run in the past? In addition, when these assets are leased, the leasing company (or another company that leases the same asset in the future) may inadvertently obtain access to a borrower’s proprietary data.

It’s important for borrowers to wipe hard drives clean multiple times when disposing of equipment or returning it to the leasing company. Many public companies follow the U.S. Department of Defense protocol, which requires data to be overwritten at least three times. Alternatively, companies with limited resources may opt to outsource equipment disposal to reputable third-party vendors.

Equipment disposal environmental concerns

Lax equipment disposal protocol also can lead to environmental issues. For example, used technology equipment may contain lead, cadmium, arsenic, mercury and other toxic materials. In addition to polluting the environment, a violation of most borrowers’ ethics policies, contaminants that are linked back to a company can lead to a tarnished image.

As a safeguard, borrowers shouldn’t just toss equipment in the trash. They should outsource disposal to reputable vendors and inquire about the steps their vendors take to ensure that assets will be disposed of in an environmentally sensitive manner. Unfortunately, many assets that companies presume were properly disposed of actually wind up improperly incinerated or shipped to foreign countries without laws prohibiting toxic materials from being dumped in their landfills.

A gentle reminder

Secure disposal is essential to prevent yesterday’s assets from becoming tomorrow’s liabilities. Protect your portfolio by reminding borrowers about these risks and inquiring about their equipment disposal protocol.

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