Got a nanny?
You need a shredder

Won't dent the problem
But the shredder rule won't necessarily do much to reduce ID theft, Collins said. Catching sloppy nanny employers won't even dent the problem, she says, because most identity theft is caused by inside employees who steal data -- not street thugs digging through garbage cans.

What it will do is cut down on a number of embarrassing news stories showing just how easy it has been to steal data while sifting through neighborhood trash.

Sen. Bill Nelson, R-Fla., who is credited with inserting the disposal rule into the FACT Act, began a crusade against sloppy data trash practices in 2002 after the discovery of 1,000 customer files outside a financial firm in Naples, Fla.

The discovery was made by NBC affiliate WBBH-TV, in Fort Myers, Fla. The files contained everything from Social Security numbers to credit reports neatly organized in boxes, said Gregg Palermo, who runs the station's investigative unit.  Subsequent dumpster diving stories by his station uncovered discarded files outside law firms and government records of lottery winners.

Those news stories, Nelson's office said, were the motivation for the FACT Act disposal provisions.

Old-fashioned methods
How can consumers make sure they are in compliance with the FTC rule? Of course, for those who felt comfortable cutting up credit cards and disposing of them, the manual method is still available, Fellowes said. When his father -- credited with bringing shredding to home consumers -- clipped old credit cards into two pieces, he was sure to drop the halves into different garbage bins. But torn consumer paperwork must be ripped so well that the data on them is indistinguishable, according to the new FTC rule. "If you do rip it, you have to rip it into fine bits," Fellowes said.

Burning is also an option, "if you sit there and watch it burn," said Chris Ockenfels, president of the National Association for Information Destruction, a new industry group. 

Shredders are the automated solution. Traditional "strip" shredders create about 15 pieces that can be reassembled -- an annoying, but achievable task for identity thieves.  Cross shredders chop documents into about 300 pieces.

Digital documents pose their own disposal challenges. The FTC says simply deleting contents from an e-mailed criminal background check isn't enough. The data must be destroyed and irretrievable.  When an old computer is thrown away, physical destruction of the hard drive is recommended, Ockenfels said. 

But until companies and data users become diligent destructors, criminals will continue to find data lying around neighborhoods.

"It's happening in every city all across the nation, every day," he said. Destroying data is estimated to be an over $2 billion-a-year business he said.

All that destruction is a good idea, Collins said.  But she warned that diligent shredders might end up with disappointing results.

"I encourage everyone to shred their own documents but for goodness sake, the problem of someone stealing their information from a dumpster is considerably less than when they go to work and give that out information at the workplace."

Bob Sullivan is author of Your Evil Twin:  Behind the Identity Theft Epidemic

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