ChoicePoint Settles With FTC

Data broker ChoicePoint has reached a $15 million settlement with the Federal Trade Commission (FTC) following the company’s disclosure a year ago that it had turned over sensitive personal data for about 150,000 people to bogus customers. The FTC alleged that ChoicePoint did not have adequate procedures in place to prevent such fraud and that the company ignored what should have been red flags about the identity of the customers requesting data, including credit reports.

ChoicePoint, which has over the past year taken steps to address the problems that led to the incident, said it disagrees with some of the FTC’s findings but supports the settlement. The settlement covers a $10 million fine, the largest ever meted out by the FTC, and $5 million that will be held in an account and used to reimburse consumers who can demonstrate losses due to the ChoicePoint incident. Sen. Charles Schumer (D-N.Y.), who introduced tough legislation to regulate the data-brokerage industry after the ChoicePoint scandal, said he thinks the fine was too low and will encourage others to see such penalties as “just the cost of doing business.”

New York Times, 27 January 2006 (registration req’d)