Many companies try to get away with not shredding by using a recycling company. Although, both recycling companies and shredding services recycle the paper it is what happens before it is pulped that makes all the difference. A shredder uses locked bins to store and transport any files. This maintains a chain of custody from the locked storage room or file cabinet until it is rendered un-readable. A shredder also keeps video surveillance on their operations and maintains strict hiring practices. A recycle does neither since it is only scrap they are dealing with.

Binghamton University now knows the difference between the two. They put student records into a recycle bin only to have then discovered by the student radio station. [source]