The recent revelation that the Veteran’s Administration lost the data files of more than 26 million veterans when an employee’s laptop was stolen in a burglary is just another reason for payments providers to tighten internal security standards. It’s also another reason to stop complaining that disclosure, not the loss of the files, is the real problem.

In the VA case, it took three weeks for the loss to come to the attention of the agency head. Even then, he stumbled across it. Apparently, nobody had thought the event important enough to tell him. Naturally, he was vilified before Congress. But the real problem was in cyberspace, where the number of Social Security numbers available for sale more than doubled in the weeks following the burglary.

The liabilities created by this theft—and the hundreds of others we’ve read about in the past 18 months—are not merely theoretical. The victims will be dealing with the effects for years, and financial institutions have a duty to make them whole.

–AR