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Source: Globe And Mail

Posted on February 22, 2005

      ChoicePoint Inc., under fire for being duped into allowing criminals to access its massive database of personal information, said yesterday that more than 140,000 consumers across the United States may have been affected by the breach of the company's credentialing process.

      The data warehouser also announced plans to rescreen 17,000 business customers to make sure they are legitimate.

      The Alpharetta, Ga.-based company said it has hired a retired U.S. Secret Service agent to help revamp its verification process. It also has paid for a one-year subscription to a credit monitoring service for each of the 144,778 people who may have been affected by the breach.

      The company said the largest number of possible victims - 34,114 - was in California.

      ChoicePoint said it is almost finished notifying by mail all of the potential victims. California authorities have said as many as 500,000 people may have been affected, but ChoicePoint disputes that number.

      "All I can tell you is our number is roughly 145,000, and we know that we're overnotifying," ChoicePoint marketing director James Lee said. "There will be duplications in there."

      Last week, attorneys-general in 38 states demanded ChoicePoint inform all affected consumers that they might vulnerable to identity theft amid concerns the company was foot-dragging. Politicians have also become involved, with two U.S. senators calling for hearings and stepped-up regulations to protect consumers.

      The customers affected represent less than 5 per cent of the company's $900-million (U.S.) in annual revenue.

      Formed in 1997 as a spinoff of credit reporting agency Equifax Inc., ChoicePoint has 19 billion public records in its database at its suburban Atlanta headquarters, including everything from motor vehicle registrations, licence and deed transfers, military records, names, addresses and Social Security numbers.

      The company acknowledged last week that thieves apparently used previously stolen identities to create what appeared to be legitimate businesses seeking ChoicePoint accounts. The bandits then opened up 50 accounts and received volumes of data on consumers, including names, addresses, Social Security numbers and credit reports.

      The ring, which operated for more than a year before it was detected, used the information to defraud at least 750 people, according to investigators in California.

      Like any business that opens an account with ChoicePoint, the suspect companies were given an access code and password that allowed them to use ChoicePoint's database. ChoicePoint says it puts applicants for accounts through rigorous protocols such as verifying business licences and individual's names and background checks.

      In this case, the thieves - posing as cheque-cashing companies or debt collection firms - provided business licences that appeared to be legitimate and used the names of real people with clean criminal records. The company caught on later by tracking the pattern of the searches used by the suspects.

      The company learned of the problem in October, but did not notify those customers who were possibly affected until this month because authorities did not want to jeopardize their investigation.

      As for the rescreening, ChoicePoint said any business that is not publicly traded or not a government agency will have to be recredentialed to use its services.

      "It will involve the revalidation of any information they previously provided as well as requests for additional information," Mr. Lee said.

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