Progress cited in thwarting ID theft

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Executives from the data broker industry told a Senate panel yesterday they are making progress in stopping identity theft, a crime affecting about 10 million consumers a year at a cost of more than $50 billion.

The House and Senate are holding hearings this week to consider whether to make data providers and credit-card companies subject to the same regulations as banks and other financial services companies.

In the past several months, ChoicePoint, LexisNexis and Bank of America have admitted that customers' information has been lost or stolen.

"If we are not successful, no one in America is going to have any privacy left," said Sen. Bill Nelson, Florida Democrat and member of the Senate Commerce, Science and Transportation trade, tourism and economic development subcommittee.

Cases of identity theft have become more publicizedafter California enacted a law in 2003 requiring data brokers to notify consumers of any potential breaches affecting their personal identity information.

The law forced companies such as ChoicePoint Inc., an information broker, to tell 145,000 consumers in February that a Nigerian crime syndicate had stolen financial information about them.

Bank of America disclosed in February that it lost data tapes containing the Social Security numbers and home addresses of the holders of 1.2 million government charge-card accounts.

Last month, LexisNexis Group, a legal information publisher, revealed that thieves may have accessed information on 310,000 people listed in its records.

Congress is considering legislation similar to the California law to help consumers protect their personal information after a security breach.

Otherwise, "the full impact of these breaches may never be known," said Sen. Daniel K. Inouye, Hawaii Democrat.

ChoicePoint and LexisNexis executives told the Senate panel that they would agree to extend consumer notification rules to their databases while asking senators to find a balance between privacy and business in any legislation.

"LexisNexis strongly encourages that any legislation considered strike a balance between protecting privacy and providing legitimate businesses, organizations and government agencies with access to critical information," said Kurt Sanford, president of U.S. corporate and federal markets for LexisNexis.

Sen. Gordon H. Smith, Oregon Republican and chairman of the trade, tourism and economic development subcommittee, echoed the concerns of the companies.

"We need to make sure that this legislation strikes the right balance to ensure the continued existence of the critical services while ensuring the security of personal information to prevent its misuse and subsequent breaches," he said.

Sen. John Kerry, Massachusetts Democrat, expressed concern that data brokers would give law-enforcement agencies personal information about people even if they are not suspected of crimes.

• This article is based in part on wire-service reports.