Bank loses tapes with data on 4.5M clients

Connecticut AG blasts BNY Mellon for failing to notify victims for three months

Bank of New York Mellon Corp. officials last week confirmed that a box of unencrypted data storage tapes holding personal information of more than 4.5 million individuals was lost more than three months ago by a third-party vendor during transport to an off-site facility.

The bank informed the Connecticut State Attorney General's Office that the tapes belonging to its BNY Mellon Shareowner Services division were lost in transport by off-site storage firm Archive America on Feb. 27. The missing backup tapes include names, birth dates, Social Security numbers, and other information from customers of BNY Mellon and the People's United Bank in Bridgeport, Conn., according to a statement by Connecticut Attorney General Richard Blumenthal.

Archive America refused to comment about the missing backup tape, citing confidentiality agreements. A People's United Bank spokesman could not be reached for comment.

BNY Mellon Shareowner Services, which includes handling employee stock option plans, said that it has begun notifying affected clients. It contended that none of the unencrypted data has been accessed or used.

"We'd like to provide people with a more current characterization [of what happened], but we are not yet in a position to make that available," said BNY Mellon spokesman Ron Sommer. "Our intention is to make it available as soon as we can."

Blumenthal said that the bank's offer of a year of freed credit monitoring to those affected by the breach is "grossly inadequate." He also slammed the bank for not promptly notifying customers of the security breach.

"The loss of this tape — so far unrecovered and unremedied — is inexplicable and unacceptable," wrote Blumenthal. "I am especially concerned by the delay in informing customers, possibly heightening the risks of wrongdoing."

Blumenthal said that he is working with the New York and New Jersey attorneys general and the Connecticut Department of Consumer Protection to investigate the breach. Further, he said that he is pressing the bank to explain how some backup tapes disappeared while others on the same van arrived intact at the Archive America facility.

This week, a lawyer representing 40 affected individuals filed a class-action lawsuit against the New York bank in Connecticut Superior Court. Attorney Michael Stratton, who represents the plaintiffs, said he is seeking up to seven years of free credit monitoring and credit insurance for customers, along with unspecified damages.

"It's inconceivable to me that you have unencrypted data on tapes being transported and stored. I can't imagine why you wouldn't have a sophisticated encryption program to make it virtually impossible to break the code even if they were to become lost," remarked Stratton.

Copyright © 2008 IDG Communications, Inc.

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