Lesson number one: There is no such thing as infallible security. Lesson number two: The bigger the database, the more tempting it is to identity thieves, who much prefer one-stop shopping.

"CIOs should stop telling their CEOs that technology is the answer," says Bruce Schneier, founder and CTO of Counterpane Internet Security of Cupertino, Calif., and a nationally recognized authority on security. "CIOs have to accept the fact that all that security just doesn’t work; you have to build your systems assuming they will fail."

The trick is to build them to fail robustly so that if one firewall is breached, you have a dozen other precautions in place to blunt the attack. Because attack they will. Identity theft is a mushrooming problem in corporate America, as companies lost almost $12 billion to online identity theft in 2001, according to the Identity Theft Resource Center, a nonprofit clearinghouse in San Diego. Approximately 750,000 cases of identity theft are reported to authorities every year, center officials say.

The free flow of customer information via the Internet is one reason why identity theft has tripled in the past five years. But so is the huge desire on the part of credit card companies to extend instant credit and then rely on one identifier to authenticate a customer’s identity. There is a growing black market in credit card and Social Security numbers, and the push toward authenticating identity with one supposedly unbreachable identifier, like a fingerprint, has the potential to only make matters worse.

"If I steal your password, a credit card company can issue you a new password," says Chris Hoofnagle, legislative counsel for the Electronic Privacy Information Center in Washington, D.C. "But if people are able to lift a latent fingerprint of yours and reproduce it in a mold?and this can be done?you can’t be issued a new fingerprint. So how do you prove you are you?"

Schneier agrees. "The reason identity theft is so powerful is that much of our security today is based on your identity," he says. For example, many insurance companies, financial institutions and government agencies (like the Registry of Motor Vehicles) rely primarily on Social Security numbers as identifiers. So if someone knows your Social Security number and a few other facts about you, he can easily steal your identity.