PROVIDENCE — Attorney General Patrick C. Lynch is going after “Dumpster divers,” those bottom-feeding scoundrels who are often involved in identity theft.

For the second straight year, Lynch has proposed legislation that requires businesses and government agencies to destroy personal records and other information on customers rather than simply discard the documents in the trash.

The need for the law, Lynch said, was underscored by a recent settlement in which CVS-Caremark paid $2.25 million to resolve allegations that it violated the Health Insurance Portability Act when it failed to properly dispose of confidential medical and financial information.

Also, in the fall of 2007, a Coventry business dumped customer files with personal data in a Dumpster. A passerby recovered the files and called the attorney general’s office.

“These kinds of breaches point out how important it is for businesses to shred documents that may contain people’s private information,” Lynch said. “Identity thieves know where to look, and when businesses carelessly toss out personal records without shredding or taking other precautions … they’re practically holding an open house for Dumpster divers.”

Under current law, the state only protects those whose personal information was breached through a computer. There is no remedy for violations of inappropriately dumped personal information in paper records.

The new law, if enacted, would require companies to take reasonable steps — shredding or erasing — to make sure that sensitive information is indecipherable. Such information includes Social Security numbers, passports, bank accounts and drivers’ license numbers.

Businesses found not in compliance would be subject to civil penalties ranging from $500 to $50,000.

Companion bills are being sponsored by Rep. Raymond J. Sullivan and Sen. Leonidas P. Raptakis, both Coventry Democrats.

“In this day and age, when identity theft is a well-known problem, it’s just common sense that any business that’s tossing out documents should shred them first,” Sullivan said. “If they don’t, they could be handing identity thieves all the information they need to wreak serious financial havoc upon their customers.”

Last year’s bill passed the House, but failed to get out of committee in the Senate.

bmalinow@projo.com