FTC pursues only one case so far
Another apparent weakness has been enforcement. More than 2½ years after the Disposal Rule went into effect in June 2005, the FTC has brought only one case.

The FTC announced in December that it had reached a settlement with American United Mortgage Co. of Northbrook, Ill., which left hundreds of borrowers’ financial documents, some of them including Social Security numbers, in an unlocked Dumpster, many of them in open trash bags.

Although the FTC said the company was found to have repeated the practice at least twice after it issued a warning in March 2006, the agency agreed to settle the case for only a $50,000 fine and American United’s promise not to do it again.

“Every business, whether large or small, must take reasonable and appropriate measures to protect sensitive consumer information, from acquisition to disposal,” FTC Chairwoman Deborah Platt Majoras said in announcing the settlement. She promised that the FTC would “continue to prosecute companies that fail to fulfill their legal responsibility to protect consumers’ personal information.”

How do you prosecute a dead company?
The FTC was able to impose some penalty on American United because it’s still in business. But when a company no longer exists, how do you protect its customers?

That’s the conundrum facing regulators and consumer activists in several states where recently defunct mortgage companies tossed sensitive papers in the trash as they turned out the lights:

• Sheriff’s deputies in DeKalb County, Ga., outside Atlanta, found the mortgage records of at least 1,200 former customers of Ameriquest Mortgage Co. in a Dumpster behind an apartment complex in October, two years after the company, once one of the nation’s biggest subprime lenders, went out of business.
• In December, the state of Ohio filed suit against the former president of Randall Mortgage Services Inc. four months after it closed up shop, leaving behind the unsecured records of its customers, including Social Security numbers, credit reports, wage statements and bank account numbers. The best the state can hope for is a $25,000 fine and a promise not to do it again.

• In Honolulu last year, a handyman hired by the former president of the defunct Fidelity Escrow Services dumped 39 boxes of financial records in a recycling bin. “Social Security numbers, bank account numbers, credit reports, credit card statements — you name it, everything was in there,” said Jim Kelly, a business journalist who stumbled on the boxes when he took out his own recycling.

“It’s kind of amazing — in this day and age, given how sensitive people are about asking for your Social Security number, about putting it on paper — that this sort of stuff would end up getting tossed away so carelessly,” Kelly said.

For the former customers, there is little recourse, since there is no company left to pursue.

“I’m furious, I’m angry, I’m hurt,” said Tonya Brown, a former Ameriquest customer in Atlanta. “Who could be that irresponsible?”

Kim and Edwin Soeder, of Mentor, Ohio, are worried about their retirement plans after their accounts were found among the Union Mortgage records in Cleveland.

“It makes you wonder how bad your credit rating becomes if people get this in their hands,” Kim Soeder said.

MORE FROM TECHNOLOGY & MONEY

Technology & Money Section Front

It’s not too late! Find a seasonal job   Share your financial tips for the new year The 11 lamest blogs on the Internet Cost of 12 days of Christmas rises to $86,609 Scout out hidden fees and save hundreds Expecting a pink slip? What you need to know The Duggars: How they live debt-free Budget tips for the self-employed In shaky times, are gift cards a bad bet? 'Obama cookie' bringing in a lot of dough Technology & Money Section Front   Add Technology & Money headlines to your news reader: