IDT Risk Management A Small Business Ticking Time Bomb

1. IDT Risk Management A Small Business Ticking Time Bomb Identity THEFT Certified Identity Theft Risk Management Specialist

2. Overview…. • What identity theft really is • How it affects consumers and employers • Why awareness & prevention training to “create a culture of security” is critical • Implementing reasonable steps to lower riskand minimize exposure

3. IDENTITY THEFT “The fastest growing white-collar crime in America” According to the FBI

4. 9.9 million Americans were victims of Identity Theft last year, up from 70,000 in the year 2000 Javelin Research • Data Breaches have reached an all time high Javelin Research • Average victim can spend up to 600 hours fixing this problem Federal Trade Commission Report • 62% of victims had warrants issued for their arrest ITRC • Small Businesses suffer from identity fraud at one and a half times the rate of average victims ITRC Latest statistics show

5. Five Types Of Identity Theft

6. Data breaches are at an all time high AUSTIN — Social Security numbers and other personal information for 4.9 million people were inadvertently disclosed…, Comptroller Susan Combs revealed Monday. Stanford Hospital & Clinics confirmed it experienced a data breach of 20,000 patient medical record numbers, hospital account numbers, billing charges, ER admissions and discharge dates. This breach has resulted in a $20M Class Action Suit being filed against the hospital. A Starbucks employee has brought a class-action lawsuit against the coffee retailer, claiming damages from a data breach. Laura Krottner was one of 97,000 employees notified late last year after a Starbucks laptop containing employee names, addresses and Social Security numbers was. Krottner'ssuit accuses the company of fraud and negligence.

7. Who is Responsible? “A rise in identity theft is presenting employers with a major headache. They are being held liable for identity theft that occurs in the workplace.” BLR: Business and Legal Reports “…the workplace is the site of more than half(52%) of all identity thefts” Human Resource Executive If someone has to spend time and money trying to recover their identity, how can there be no damages? ”

8. There are costs to employers • “If you experience a security breach, 20 percent of your affected customer base will no longer do business with you…and 5 percent will be hiring lawyers! - Identity Theft Resource Center (ITRC) • “When it comes to cleaning up this mess, employers average 1,600 work hours per incident at a cost of $40,000 to $92,000 per victim. - CIO Magazine, The Coming Pandemic, M. Fredenberg) • Can reduce productivity with employees taking up to 600 hours, mainly during business hours, to restore their identities. - Federal Trade Commission • “A 50 employee company with an average wage of $20/hour will lose over $52,000 per year due to employee legal life events!” - Harris Interactive

9. Employees are the primary cause of breaches… 88 % of data breach cases involve insider negligence “While the cost of data breaches fluctuates from year to year, one thing has remained the same – employee negligence is the leading cause of data breaches.” “This is a frustrating statistic because it seems that addressing employee negligence would be the easiest, least costly way to make the most significant gains in data protection,” Ponemon said.... education and awareness can create a more vigilant, security-conscious culture, yet we see employee negligence remains atop the charts.” Dr. Larry Ponemon

10. Federal and state laws are now in effect that create serious new liabilities for all employers regarding ID theft that can be traced back to the workplace. Betsy Broder, the Associate Director of the Federal Trade Commission division, was quoted in the American Bar Association Journal saying,“…We’re not looking for a perfect system. But we need to see that you’ve taken reasonable steps...” The FTC booklet, Protecting Personal Information A Guide for Business says, “Create a ‘culture of security’ by implementing a regular schedule of employee training.”

11. This law applies to any business, regardless of size, that collects personal information or consumer reports about customers oremployeesto make decisions within their business (including names, credit card numbers, birthdates, home addresses and more). • Civil liability.An employee could be entitled to recover actual lossessustained if their identity is stolen from an employer… • Class action lawsuits. If large numbers of • employees are impacted, they may be able to bring class action suits and obtain punitive damages from employers.

12. A Growing Exposure For Identity Theft Risks -Kirk Nahra An effective mitigation plan often will reduce or eliminate these realistic threats.” “This mitigation plan is very important, because this plan kicks in when the rubber meets the road - you have had a security or privacy breach and need to "fix it" immediately in the eyes of your customers, regulators and management.” “Watch for the breakout case, which could open the litigation floodgates. The critical cases to watch will be those that combine a negligence approach with a credible damages argument, on a class-wide scale. And pay special attention to any laws that include statutory damages—eliminating the need to prove actual damages.”

13. “The biggest surprise from my perspective had to do with a recent case, which -- the way it was positioned -- was the threat of future harm is sufficient in terms of a data breach. It's a huge reversal from previous court cases where the plaintiff had to show actual harm resulting directly from a breach.” Brian Lapidus, COO of Kroll Fraud Solutions Ninth Circuit Holds That Increased Risk Of Identity Theft Is Sufficient For Article III Standing: Privacy Class Actions Likely Tougher To Dismiss This decision highlights the risks of potential data-breach-related litigation faced by all companies that collect, maintain, and use personal data. It further illustrates the increased importance of avoiding data breaches and developing effective response programs to manage related litigation risks when a breach occurs.

14. Proactive or Reactive? “HR Leaders should be more proactive in protecting and educating employees through a growing number of employer-sponsored solutions…” “One solution… is to offer some sort of identity theft protection as an employee benefit. An employer can choose whether or not to pay for this benefit. The key is to make the protection available, and have a mandatory employee meeting on identity theft and the protection you are making available. . .” Employers Solution to Fines and Lawsuits Business Legal Reports The cost of being reactive to this issue could be unlimited

15. How We Help ID Theft Awareness & Prevention Training Real World “Best Practices” Training for Employees Trainings Solutions ID Theft and Life Event Legal Mitigation Plan Comprehensive mitigation plan offering to all employees on a voluntary basis

16. Acknowledgement of Training andProof Of Offer Of Identity Theft Protection & Legal Services Mitigation Plan I acknowledge that I have participated in the Identity Theft Awareness Training sponsored by my employer. I further acknowledge that my employer is making an optional mitigation program available to me at a discounted rate, and that enrollment in this program may significantly reduce the financial and time impact to me and my family in the event of identity theft and many other legal ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ I acknowledge that these benefits are available to me as an optional payroll deduction program~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ PRINT NAME: ________________________________________________ SIGNATURE: ________________________________________________ DATE: _____/______/_____ EMPLOYER: _________________________________________________ Proof of Attendance of Identity Theft Training As an ID Theft Risk Management Specialist, I hereby witness that this individual has attended the identity theft training on the date indicated on this form. _________________________________________________ ID THEFT AWARENESS TRAINER

17. MOST AMERICANS ARE LOCKED OUT OF OUR LEGAL SYSTEM! • ID theft and legal issues can be life changing events for families • Employee personal problems can become personnel problems and cause lost productivity • Survey shows 7 out of 8 employees have had at least 1 Legal Life Event in the past year and ½ had 2 or more!* • Legal Problems on the job costs employers on average $600 per employee annually* * Harris Interactive Study

18. November 2010 CyberSecurity Survey 79% of Americans are concerned about identity theft Yet, only 12% are enrolled in an identity theft protection program. *The data for the U.S. Consumer Study on Identity Theft was collected through Survey Sampling International in Shelton, Connecticut. Results have a margin of error +/- 5%. Market Research and Focus Group Study Results We typically enroll over half of employees who hear our presentation Source: Decision Analysts, LegalShield Consumer Study 2011 of 30,000

19. Complete Wall of Security 25% 24/7 Preventive Wills, etc. Motor Vehicle Trial Defense Federal Audit Other Discount Legal Shield Monitoring Restoration Families Can Live Worry-Free Every Day and Every Night Now And Forever Employees cannot use the plan against employer – fully portable and rate stable for employees

20. Our Two-Component Solution… • Cansignificantly reduce employer liability and costs • Can reduce absenteeism and improve productivity associated with ID theft and legal issues: • FTC report says 1 in 5 will be hit with ID theft and victims can spend over 600 daytime hours trying to recover. • According to LSK Research, almost half of the employees surveyed, 48.2%, took time off for legal and legal-related reasons. • Provides employees access to a NOW benefit they will use and use often!Employees love having our ID theft and our legal access plan to to build a wall of security & protection around the entire family. Adds a layer of security for the business and around employees and their families

21. What a few of our clients are saying… “Thank you for the outstanding job you did in the education and training of our employees…” Billy Sims, Vice-President, Human Resources- SFB “I was becoming increasingly concerned about identity theft in the workplace… Our employees were very appreciative…and we were able to implement it all at no cost to our company.” Keith Dotson, HR – TSS “Thank you for the outstanding training you conducted…We had very positive comments from employees. I would strongly recommend this training and benefit to any company seeking practical ways to protect their employees and bottom line...” Cathy Nave, VP TSB “I am writing to recommend the mitigation services of IDT. We have been impressed with their expertise and level of support…” Jose Tabuena, SVP Governance and Compliance MEHG Thank you. We would sincerely appreciate an opportunity to visit with you to answer any questions IDT Risk Management

22. Thank You IDT Risk Management Group