Staff treated as security risks if they take iPods to work

Companies clamp down on electronic devices that could be used to steal sensitive information from office computers

Do you have an iPod? Do you take it to the office? Do you plug it into your work computer so you can play or download music?

Well watch out. Your employer may have to confiscate it for fear that you have secretly stolen confidential information. And it is not just the Apple device - it is any MP3 player, or PDA, or smart mobile phone, or sophisticated games console.

Companies are becoming worried about staff downloading sensitive information from office computers. And according to Kroll Ontrack, the electronic discovery arm of the giant private detective group, US workers have had their iPods and mobiles searched as part of investigations into possible security breaches, and as part of the "discovery" process in legal actions. Recently, a court case hinged on emails retrieved from a handheld Blackberry, which allows staff to access their work emails from out of the office.

"IPods can hold any form of data, not just music, so you can download anything to them - including Powerpoint presentations and Excel spreadsheets," said Tracey Stretton, a legal expert at Kroll Ontrack. "You can copy documents across to it using a regular USB port. IPods have become devices that let you to take intellectual property out of the office."

Investigators are warning that it is only a matter of time before an employee in the UK has their iPod confiscated and searched. Hitesh Patel, a partner at KPMG Forensic, says the police already have the power to search personal electronic devices that they suspect may hold information germane to a case. And the courts have shown they are willing to give orders to allow home computers to be seized and searched.

Technology has moved on in the investigative world. The probes into malpractice on Wall Street by Eliot Spitzer, the New York attorney general, retrieved emails sent by top analysts that described companies they were recommending as a "piece of crap". This was despite the emails having been deleted. Programs devised by Kroll can locate information in any computer using key word searches.

Large companies are becoming more aware of the threat posed by memory sticks, also known as thumb drives, which can be plugged into computers and hold gigabytes of information. As the name suggests, these devices are tiny and can be easily hidden.

Many companies ban the use of thumb drives and ask employees not to bring them into the workplace. Some go further. "A lot of them are disabling USB ports," said Ms Stretton. "They are also taking away the privilege to re-enable these ports."

Another big issue is the use of digital cameras. Many design companies and creative agencies have had to ban them in their offices for fear they will be used to copy designs or images that could be sold to rival companies. But now they are facing the problem of what to do about mobile phones, as many are fitted with cameras and it is extremely hard to stop staff taking their phones into work.

Electronic fraud is on the increase. KPMG Forensic's "Fraud Barometer", released this summer, showed that the total value of fraud cases reaching court had more than doubled in the first half of 2005 compared to the same period of 2004, reaching a total value of some £250m. Two-thirds of fraud was committed by professional criminals, but more than £38m worth was committed by management and employees.

Fraud is not the only issue. In many investment bank dealing rooms on Wall Street and in the City, the use of mobile phones is banned. This is because all conversations have to be taped for compliance reasons.

However, in a recent case, an unnamed bank had to dismiss a dealer for sending a text message, even though he claimed this was not covered by company policy.

According to Kroll, text messages may be one of the few areas investigators cannot probe. As yet, even the best electronic detectives have not found a way of retrieving texts that have been deleted. At least one form of communication may still be secret.