- The Washington Times - Thursday, January 26, 2006

Data broker ChoicePoint Inc. has agreed to pay $15 million as part of a settlement with the Federal Trade Commission for compromising the financial records of more than 160,000 consumers.

In addition to a record $10 million civil penalty, the Alpharetta, Ga., company yesterday agreed to pay $5 million to help compensate the 800 identity-theft victims of the breach who have come forward so far, said FTC Chairman Deborah Platt Majoras.

“ChoicePoint failed to do reasonable and appropriate procedures for approving new customers … and monitoring existing ones,” Miss Majoras said. “Companies must protect sensitive consumer report information” at the front door when people are applying and at the back door from hackers.

ChoicePoint is a publicly traded company that obtains and sells consumer information to more than 50,000 businesses and government agencies. Company executives acknowledged in February that it had provided the sensitive information, including names and Social Security numbers, to fraudulent operators who never should have been approved as customers.

The breaches occurred in September 2004, but law-enforcement agencies instructed ChoicePoint to postpone an announcement to avoid jeopardizing their investigation, a company spokesman said.

Nearly 60 million Americans were put at risk for identity theft last year because of data breaches at myriad organizations, including banks, credit card companies and universities.

The settlement also requires ChoicePoint to conduct site visits and other new procedures to ensure its consumer reports go only to legitimate businesses; establish and maintain a comprehensive information security program; and obtain audits by an independent third party every other year until 2026.

The company, which reported $1.06 billion in revenue last year compared with $918.71 million in 2004, did not admit to any wrongdoing by accepting the FTC settlement. But ChoicePoint did take an $8.8 million charge in the fourth quarter because of it, Chairman and Chief Executive Officer Derek V. Smith said yesterday.

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