Business Practices & Corporate Accountability News

At news conference this morning, January 26, the Federal Trade Commission announced a 15 million dollar penalty against ChoicePoint for failing to protect data security.

ChoicePoint is an Atlanta-based data mining company that compiles a vast database of information on millions of Americans drawn from court records and other public documents. The company maintains a record on almost every adult American. ChoicePoint is infamous for allowing a fraud ring to gain access to the personal and financial information of an estimated 140,000 American consumers last year from computer databases maintained by the company.

"We only know about the millions of consumers whose financial lives have been put at risk of identity theft and fraud because of a pioneering California security breach notice law. In 2005 similar laws were adopted by 22 other states," said MASSPIRG Consumer Advocate Eric Bourassa. "This penalty sends a strong message to companies that collect consumers' information that they must have security measures in place to protect personal data."

A major way consumers can protect themselves against identity theft is to place a security freeze on their credit reports, which 12 states have now enacted in some form. (See a list at www.pirg.org/consumer/credit/statelaws.htm ) Unfortunately Massachusetts is not one of these states. However, the state legislature is working on an identity theft prevention bill that should include these two reforms.

The need for strong identity theft protections was underscored yesterday when the FTC released its complaint statistics with identity theft toping the list with more than one in three of 680,000 fraud complaints to FTC being about identity theft (including credit card fraud). The next category Internet auctions, only 12%.

"Identity theft is still a huge problem," said Bourassa. "Federal laws only give victims modest tools to clear their names. The best way to prevent identity theft is to give consumers control over their own credit reports."

MASSPIRG reports that states are leading the way in enacting tough security freeze laws that allow consumers to lock thieves out. MASSPIRG advises consumers to regularly check their checking account statements for debit card fraud, their credit card statements for credit card fraud and their credit reports for fraudulent accounts and other mistakes that could cause credit denial. You have a federal right to look at your reports annually for free for any reason--and if you suspect fraud or identity theft, you can look at your report again for free. If you suspect fraud or identity theft, you should also request a fraud alert be placed on your reports (call one bureau and they'll tell the others).