Consumer Data Broker ChoicePoint Failed to Protect Consumers' Personal Data

ChoicePoint, Inc., one of the nation’s largest data brokers, has agreed to strengthened data security requirements to settle Federal Trade Commission charges that the company failed to implement a comprehensive information security program protecting consumers’ sensitive information, as required by a previous court order. This failure left the door open to a data breach in 2008 that compromised the personal information of 13,750 people and put them at risk of identify theft. ChoicePoint has now agreed to a modified court order that expands its data security assessment and reporting duties and requires the company to pay a $275,000 penalty.

In April 2008, ChoicePoint (now a subsidiary of Reed Elsevier, Inc.) turned off a key electronic security tool used to monitor access to one of its databases, and for four months failed to detect that the security tool was off, according to the FTC. During that period, an unknown person conducted thousands of unauthorized searches of a ChoicePoint database containing sensitive consumer information, including Social Security numbers. The searches continued for 30 days. After discovering the breach, the company brought the matter to the FTC’s attention.

The FTC alleged that if the security software tool had been working, ChoicePoint likely would have detected the intrusions much earlier and minimized the extent of the breach. The FTC also alleged that ChoicePoint’s conduct violated a 2006 court order mandating that the company institute a comprehensive information security program reasonably designed to protect consumers’ sensitive personal information.

Under the agreed-upon modified court order, filed on the FTC’s behalf by the Department of Justice, ChoicePoint is required to report to the FTC – every two months for two years – detailed information about how it is protecting the breached database and certain other databases and records containing personal information.

The FTC’s prior action against ChoicePoint involved a data breach in 2005, which compromised the personal information of more than 163,000 consumers and resulted in at least 800 cases of identity theft. The settlement and resulting 2006 court order in that case required the company to pay $10 million in civil penalties and $5 million in consumer redress. Thecompany also agreed to maintain procedures to ensure that sensitive consumer reports were provided only to legitimate businesses for lawful purposes; to maintain a comprehensive data security program; and to obtain independent assessments of its data security program every other year until 2026. The new court order extends the record-keeping and monitoring requirements of the 2006 order, and gives the FTC the right to request up to two additional biennial assessments of ChoicePoint’s overall data security program.

The Commission vote to approve the modified stipulated order was 4-0. The order was filed in the U.S. District Court for the Northern District of Georgia, and entered by the court on October 14, 2009.

NOTE: This modified stipulated judgment and order is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Consent orders have the force of law when signed by a judge.

Comments

Popular Posts