Back to Newsletters... September 2005 Newsletter

How Data Brokers may be harm the Identity of Americans

ChoicePoint is an aggregator of consumer information databases and identifies itself as the largest private collection of court records, social security numbers, and other personal data that has found itself in the public domain.

ChoicePoint sells background information to insurance companies, law enforcement organizations, the federal government and othesr who wish to perform background checks on employees, business partners, tenants, and potential clients. Based in Georgia, their database was recently invaded and 150,000 people had their identity records stolen by identity thieves.

Insurance companies, banks, law enforcement agencies, and many arms of federal and local governments buy information from ChoicePoint to perform background checks on potential clients, tenants, or employees.

In an unusual Catch 22, ChoicePoint is now generating lucrative revenue by charging business and consumers who are worried about identity theft for access to their own criminal, education, and employment histories.

The paradox is that the company responsible for some identity theft is now gaining additional revenue by selling a service to protect consumers’ private information.

Information brokers infiltrated by con artists, banks that lost unencrypted financial data and peddlers of online background checks are selling fraud detection plans that range in price from $25 a year to more than $150 a year.

The companies offering these services say they provide real value, but victims of identity theft and consumer advocates complain that ChoicePoint, the major credit bureaus, and others are reaping the benefits of their own lapses and, in some cases, recklessness. They say there's little incentive for sellers of personal data to tighten security when they profit from people worrying they'll be among the 10 million annual victims of identity theft.

And during the spate of high-profile breaches that came after ChoicePoint's disclosures, state and federal lawmakers have begun debating laws aimed at forcing the companies to clamp down further. In the meantime, the credit bureaus and others are hyping their anti-fraud solutions, in some cases deceiving consumers as they take in millions of dollars for credit monitoring, identity theft insurance, and other services.

Nonetheless, some question the value of such services.

Few people who have false charges rung up in their names are held financially responsible. Federal law entitles consumers to free credit reports every year from each of the three major bureaus. In some states, consumers can put a freeze on their credit records to deter fraud.

Consequently, experts say most people don't need special insurance or credit monitoring, which checks whether new loans have been sought in their name.

Among the most familiar are the credit bureaus that have long tracked debts and payment histories. Less familiar, though, are data brokers such as ChoicePoint, which aggregate other personal information and operate with fewer restrictions. And, increasingly, banks and credit card companies maintain considerable data caches on their customers.

All trade information back and forth. The credit bureaus and data brokers also sell their information. The growth in data mining is made possible by the digitization of records, which make it cheaper and easier to collect, store, retrieve, and steal sensitive information.

ChoicePoint said it would stop offering Social Security and driver's license numbers to small businesses except when consumers approve it.

Yet since last year, ChoicePoint has also charged consumers — even if they are among the 150,000 victims — $24.95 for "identity authentication" and a check of their own criminal records.

The company web site suggests the services for those "concerned about identity theft," on top of a free search of more limited records. It won't sell to consumers, even those with improperly exposed data, still other material it inadvertently sent to the members of an identity theft ring that faked documentation to obtain ChoicePoint business accounts.

If you want to protect your information from being stolen by identity thieves, practice self discipline by destroying outdated financial, bank, and insurance files by using a paper shredder. Cross cut paper shredders, which make very small rectangular cuts, offers the best solution. Strip cut or straight cut paper shredders produce one continuous cut and are adequate for destroying some media such as cd roms, floppy disks, and other optical media.

Practice good home office practices by shredding at the source, all the sensitive data that could find its way into the hands of identity thieves before they raid your refuse container at the curb!!

Take advantage of the law that allows consumers to get free credit reports on themselves from each of the big three credit bureaus once a year. Review your credit file thoroughly and monitor your bank accounts for unusual activity. Beware the identity thief in the European hinterlands who attempts to empty your bank account via a surreptitious wire transfer. They are out there and they know who you are and will steal you blind.