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Starbucks Data Loss No Laughing Matter

Company Loses Laptops Containing 60,000 Employees' Information

By Martin H. Bosworth
ConsumerAffairs.com

November 6, 2006

Starbucks • Starbucks Tries a Downscale Approach • Economy Sour, Starbucks to Close More Stores • Starbucks to Close 600 U.S. Stores • Baristas Beware: Starbucks Puts Machines in 86 Stores • Starbucks Serves Up Free Wi-Fi • Starbucks Cuts Trans Fats • Starbucks Data Loss No Laughing Matter • Starbuck Raising Coffee Prices • Starbucks Sales Losing Steam • Starbucks Plans to Get into the Digital Download Business • Starbucks Pours on the Trans Fats • Starbucks Raising Prices • Starbucks Blends Brews and Blues --- • Consumer Complaints

Starbucks sees itself as pretty clever. After all, it has seduced an entire generation of Americans into paying ten times more than the previously prevailing price of a cup of coffee. Now it's trying to laugh off the loss of confidential data on 60,000 employees.

The company recently reported the theft of four laptop computers but pooh-poohed the notion that anyone would, you know, do anything with the stolen data.

The disappearance, which was first noticed on Sept. 6th, was not reported to the public until Nov. 4th.

Company spokesperson Valerie O'Neil made light of the incident, telling Associated Press she didn't know of any secret coffee recipes stored on the computers.

According to the company, the four "retired" laptops contained personal information on 60,000 American "partners" (employees), and 80 Canadian partners of the Seattle-based coffee chain.

The laptops' information dated prior to December 2003, before the company claimed to have changed its procedures for storing personal data and strengthened its privacy requirements.

The data contained on the laptops included names and Social Security numbers.

The company is sending letters to all potentially affected employees, and has set up a toll-free 1-800 number to answer any questions. Starbucks has also said it is offering free credit monitoring from Equifax for anyone affected.

No Laughing Matter

The threat is no joke to anyone affected by the data breach, however. If the information stored on the missing laptop is ever accessed, smart thieves will wait weeks or months before attempting to use it themselves.

Many criminal rings don't even bother attempting to steal money from identity theft victims anymore. Instead, they may take the identity data and encode it in "clone" cards, which they then use for small purchases that don't trigger fraud alerts.

Hotel key cards, for instance, have increasingly been the target of choice for criminals wanting to use stolen data without being detected.

The mass cancellation of debit cards from numerous chains in early 2006, starting with Citibank, was attributed to identity thieves stealing information, encoding it on blank cards, then making withdrawals from customers' accounts that triggered fraud alerts.

The prevalence of exposed data due to laptop theft and disappearance continues to be one of the major contributors to identity theft. Thousands of Americans are at risk every time a computer or storage device disappears or gets stolen.

The risk is often compounded by the devices having little or no security protection, or storing information that violates company policy.

Most recently, an employee of General Electric had a laptop containing data on 50,000 current and former employees stolen from a locked hotel room. The theft is as yet unsolved.

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