Shortly after moving into our co-op, I got a call from [a] J. Crew [store] saying that there appeared to be fraudulent charges [on my credit card],” recalls a New York City cooperative owner. “I followed up with Amex, and, sure enough, some idiot had gone on a spending spree with my card number.” And how did the criminal get his number? He suspects it was through a careless co-op board member. “I know that it had to be from my board [admissions] application because I always shred important documents. Only one board member returned the application to us after saying that she was tired of letting it sit in her apartment. That’s great – my most sensitive records on display for coffee-table reading.”
Another person has a different horror story: he worked at a building on Park Avenue where he easily retrieved from the trash “all the packages a board member had over the last 10 years. I read everything. I couldn’t believe how much money these people make! I had Social Security numbers, bank account numbers, copies of IDs!”
The United States is suffering from an epidemic of identity theft. The number of people who have suffered from some form of this crime long ago passed the 100 million mark. In a recent 12-month period, one out of four Americans had someone make improper use of his or her credit cards, Social Security number, or other proprietary information.
But the internet isn’t the only way thieves obtain essential information. As anyone who has had to submit or read an application to purchase knows, these comprehensive biographical compilations detail every aspect of a buyer’s history, including tax documents, credit card statements, and employment records.
Indeed: more and more co-op applicants are concerned, especially the ones who have already been the victims of identity theft. Valerie Bogart is a public-interest attorney who bought a cooperative apartment at Beverly Towers, a 130-unit complex in Kensington, Brooklyn, last winter. The twice-burned victim of identity theft, she pointedly said to the board at her interview: “I trust you will shred these documents when you’re done.” The members reassured her they would, but she has her doubts.
Unfortunately, those doubts are probably justified: many co-op boards (and even managing agents) do not consider the potential for mischief when handling these extremely sensitive documents. Admits Will Roy, a broker with Ardor Realty: “I’ve never really thought about it before. We just assume that the application is destroyed.”
Most applicants don’t demand that they get copies of the application back or even ask that the application be destroyed. Roy says buyers never ask because “their big picture [goal] is just getting the paperwork in place and passing the board.” Also, buying a co-op already puts so much pressure on applicants to appear as amenable as possible that they refrain from making any requests that might brand them as potential troublemakers.
That said, what policies should your board have in place to ensure that buyers and potential buyers don’t have their identities stolen?
First, be careful how you handle the paperwork in the review process. One unsuccessful applicant complains that the board of a co-op he sought to buy into “never managed the paperwork in a confidential way,” even though he specifically requested that the members be careful before he submitted it. “They rejected me without an interview, so I called the management company and asked if they had collected everything and shredded it,” he says. “They told me that, well, they hadn’t.” The board president had sent his copy to the agent – but the other board members had not. They had probably, he fears, just “thrown it in the trash.” This applicant – another victim of identity theft – is applying to buy another co-op unit, although he admits to being “battle shy” after his previous experiences.
This man believes that the liberal use of Wite-out on all but the last four digits of the Social Security number, bank accounts, credit cards, and other sensitive information would not make the data any less useful to a board.
“Real estate agents don’t do this because no one else does,” he complains. “But someone’s got to take the lead.” When he had served as president of a co-op in the ’90s, all essential numbers were redacted.
Then there is another problem: wagging tongues gossiping about an applicant’s personal life. Debra Rudoltz, who has bought two co-ops units, says she understood that “you could never prove where somebody got their information from,” but that she was very aware of the problem when buying her first apartment. Her boyfriend “wanted them to sign a nondisclosure agreement, which is laughable,” she says. “They can tell anyone anything.” Boards have access to a great deal of information and need to be trustworthy.
What happens after you’re done with the data? The most obvious and efficient way to get rid of the phone book-sized bound volumes of information is to shred them. Some co-ops do indeed use shredders or else return the paperwork to the managing agent to dispose of. For several years, Toni Kamins was president of 31 Jane Street in Greenwich Village where one of the board members in the 127-unit building carried a huge bundle of packages to the managing agent’s office for just that purpose or did it herself on the on-site shredder.
“We never had an incident, but everyone was concerned about the life story in those packages,” she says.
Cooper Square Realty, one of the largest management firms in the city, maintains a special, locked disposal receptacle at its main office in which application forms are discarded. Once a month, a shredding company picks up and destroys the trashed packages.
“We have thought very much about the problem,” explains Ben Kirschenbaum, who oversees the transfer department. “We have always told boards to guard this information.”
There are other ways to dispose of these documents effectively. One board numbers the packages so that it can track which members have not returned theirs. Some gather up the data after the interview and return it to the applicant or the broker, which frees the board of any liability.
Then there’s the newer option of going paperless. Cooper Square does allow packages to be submitted electronically as a PDF file. There are drawbacks, however. Jonathan Landsman, a lawyer who represents several co-ops and is a co-op board member himself, believes that the vast majority of board members will only read though the entire application if it is printed because it’s easier to flip back and forth through bound pages, and some people aren’t used to pouring through a book-length document electronically.
In addition, the paperless option raises the possibility of copying or e-mailing it. “At the end of the interview, if it’s destroyed, you know it,” Landsman notes. “On a PDF, once it’s out there, it’s out there. And it’s very hard to erase a document from a hard drive.”
(When people discard computers, they are now advised to remove the hard drive, which caches even trashed items; thieves have been known to comb through discarded computers looking for usable data. Managing agents routinely keep one hard copy of an application on file in case of future litigation. Cooper Square keeps them electronically on a secured server accessible only to a very few people, which, Kirschenbaum says, makes them much more easily retrievable than a room full of storage bins filled with yellowing bound copies.)
In the end, there is only so much you can do. The fact that the application passes through dozens of outside hands multiplies the problem. No matter how carefully managing agents vet their staff, an unscrupulous bookkeeper or secretary could still misuse this information. It’s difficult to curb human nature. But you can certainly try.