Financial institutions need to be aware that their use of photocopiers, fax machines, and printers in processing customer transactions can result in the unintentional disclosure of sensitive and confidential customer information. In a Financial Institution Letter dated September 15, 2010, the Federal Deposit Insurance Corporation directs banks to implement written policies and procedures to address this risk.

The FDIC notes that these electronic devices may contain a hard drive or flash memory that stores digital images of documents being copied, transmitted, or printed. Because banks often lease such devices, someone who takes possession of a device after the lease ends may be able to access the digital images of documents containing sensitive personal and business information concerning the bank’s customers.

The FDIC directs banks to implement written policies and procedures to identify devices that can store digital images of documents and to ensure the hard drive or flash memory is erased, encrypted, or destroyed before the device is returned to the leasing company, sold, or otherwise disposed of. The guidance also instructs banks to erase or encrypt a hard drive using a method that renders the information on the disk unrecoverable, and notes that such policies and procedures are subject to review by examiners.

Ballard Spahr's Consumer Financial Services Group is nationally recognized for its guidance in structuring and documenting new consumer financial services products, its experience with the full range of federal and state consumer credit laws throughout the country, and its skill in litigation defense and avoidance (including pioneering work in pre-dispute arbitration programs). For more information, please contact group Chair Alan S. Kaplinsky, 215.864.8544 or; Vice Chair Jeremy T. Rosenblum, 215.864.8505 or; John L. Culhane, Jr., 215.864.8535 or; Barbara S. Mishkin, 215.864.8528 or; or Mark J. Furletti, 215.864.8138 or

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