650,000 More Customer Records Lost: It's The Physical Security, Too, Stupid

A data tape containing 650,000 J.C. Penney and other retailers' customer records including Social Security numbers, has been missing since last October, but notification of all affected customers has yet to be completed. Lots of lessons in this one.First, physical security of customer records -- including simply knowing where those records are! -- is every bit as important as digital security.

GE Money, the retailers' credit card processor, and Iron Mountain, Inc., the company storing the backup tape, acknowledge that the tape can't be found, but that's about it.

Here's a GE Money spokesman, courtesy of the AP, saying that there's "no indication of theft or anything of that sort."

What else is there of that sort? Okay: sabotage, corruption, etc: but the point is that when making an official statement about security matters of this, uh, sort, be specific, be detailed and above all don't be as apparently nonchalant as GE Money comes across.

And listen to how Iron Mountain's spokesman explained the missing tape, again in an AP story: "because of the volume of information we handle and the fact people are involved, we have occasionally made mistakes."

Now, there's a reassuring statement from an "Information Protection and Storage" company!

Add to that the fact that after two months' reassembling the missing records, GE Money opted to notify the compromised customers in batches of "a few thousand" a time, recommending that they contact a call center handling the breach.

There are undoubtedly practical realities here -- I doubt the call center could handle more than a few thousand at a time, but that's no help to the customers whose contact comes at the end or, for that matter, anywhere other than the beginning of the notification cycle. All of the notification letters should go out simultaneously.

While Penney's response to the problem has been predictable -- inquiries are referred to GE money, little more -- it's also foolish. Customers whose cards and records are affected aren't going to blame GE Moeny or Iron Mountain -- they're going to pin the problem on Penney or whatever retailer issued the card in quiestion.

Look: these are lessons that every small and mdisize business knows and knows well. Your vendors' problems that affect your customers are your problems as well as your vendors', and moreso because yours is the face the customers know.

You'd be out in front of something like this, I think -- and it's an indication of some of the things that are wrong with bigbiz retailing that J.C. Penney isn't.