Businesses could face fines of up to £5,000 from the Data Commissioner if they carelessly dispose of confidential papers, computer disks and other IT equipment, warns the British Security Industry Association.
The 1998 Data Protection Act, which became law in the UK in March 2000, requires a company to provide sufficient guarantees of security measures for the disposal of confidential data.
They include the destruction of data being carried out under contract and evidenced in writing.
There have been some high profile cases recently that have brought the issue into sharp focus, including Neil Hamilton's libel case against Mohammed Al-Fayed.
Documents detailing the proposed line of questioning by Hamilton's legal team were discovered in waste bins outside its premises.
These documents were allegedly sold to Al-Fayed ahead of the trial.