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ChoicePoint ID theft scandal prompts bill to rein in information brokers

CU endorses legislation that aims to improve security requirements and consumer rights.

Thursday, March 3, 2005

Consumers Union applauds Nelson (FL) bill to extend federal oversight to information brokers like ChoicePoint

Legislation aims to improve security, consumer rights in wake of ChoicePoint scandal

(WASHINGTON, D.C.) — Consumers Union, the nonprofit publisher of Consumer Reports ® , endorsed a bill introduced today in Congress by Senator Bill Nelson (FL) that seeks to impose tight security requirements and new consumer rights governing information brokers that maintain vast databases of sensitive records on Americans. The legislation was prompted by the recent ChoicePoint scandal, in which identity thieves gained access to the personal and financial records of an estimated 145,000 consumers.

“The ChoicePoint scandal has been a wake up call for how vulnerable consumers are to identity theft because of the lack of security standards for the largely unregulated information broker industry,” said Gail Hillebrand, Senior Attorney for Consumers Union’s West Coast Office. “This bill will ensure that information brokers are held accountable for enforcing tough security practices to prevent thieves from gaining access to sensitive consumer data. And it gives consumers important new rights to examine the information maintained about them and to correct any errors they may find.”

ChoicePoint is a Georgia-based company that compiles a huge database on millions of Americans drawn from court records and other public documents along with other personally identifiable information. The ChoicePoint files that were compromised contained such sensitive information as Social Security numbers matched to names and addresses. The fraud ring involved in the recent scandal apparently obtained the consumer information by setting up fake businesses claiming to have a legitimate need for the records. This was not an isolated incident. According to news reports, ChoicePoint was the source of information obtained by thieves arrested in 2002 who were responsible for at least $1 million in losses.

The Information Protection and Security Act introduced by Senator Nelson protects consumers in a number of important ways. The bill calls on the Federal Trade Commission (FTC) to enact rules that require information brokers to maintain and enforce strict security and customer screening procedures. In addition, the bill directs the FTC to promulgate rules that ensure that information brokers honor certain fair information practice principles such as providing individual access to personally identifiable information and individual rights to correct erroneous information.

Consumers Union is supporting efforts in Congress to adopt a federal law requiring companies to notify all consumers whose information has been compromised as a result of a security breach. Currently, only California has such a requirement, which applies just to its state residents. And Consumers Union supports tougher protections for consumers who are notified of security breaches, such as the right to place a seven-year fraud alert on their credit files.

For a copy of Consumers Union’s letter in support of the Information Protection and Security Act click here. More information about Consumers Union’s efforts to combat identity theft is available at www.FinancialPrivacyNow.org

Gail Hillebrand: 415-431-6747 or 415-572-0040 (cell)
Susanna Montezemolo: 202-462-6262