Feeds

Fraudsters expose 100,000 across US

Credit data company admits ID theft

  • alert
  • submit to reddit

Using blade systems to cut costs and sharpen efficiencies

A US credit data company has admitted that fraudsters last October accessed records on up to 35,000 people, according to reports from AP and the LA Times.

Georgia-based ChoicePoint Inc. confessed on Tuesday that the scammers "may have stolen credit reports, Social Security numbers and other sensitive information" on thousands of Californians, although it admits that "the number of victims nationwide could total 100,000". The revised figure comes after the company initially insisted that only California was affected - a claim dismissed as "ridiculous" by a computer fraud expert.

Fraudsters apparently gained access to the records by making bogus applications to set up more than 50 ChoicePoint accounts, which they then used to trawl the database as would any legitimate paying customer. ClearPoint sells its stored information to the US government and private business - landlords and credit companies are among those who use the reports to make risk assessments on potential clients.

It is not entirely clear how the scammers were able to set up these accounts, although ChoicePoint spokesman James Lee told the LA Times that the company "no longer accepted faxed copies of business licenses". He refused to explain how the scammers "circumvented rules that require permission from the subject of a credit report to release the data to a third party", but admitted: "The bad guys are very bright, very smart and very committed."

The scam was detected when a ChoicePoint employee noticed a suspicious application to open a customer account. The company contacted the Los Angeles County sheriff's fraud investigators, who discovered 50 active bogus accounts belonging to non-existent debt collection and insurance agencies, as well as other fronts. The fraudsters reportedly used previously stolen identities to set up the fake firms, lending them an air of credibility and a certain resistance to scrutiny.

Further investigation revelealed that during the one-year duration of the fraud, personal details on at least 10,000 people had been accessed, and some 750 individuals' identities used to buy goods.

Things began to unravel for the alleged perpetrators when another suspicious application for a ChoicePoint account "came in by fax from a Southern California Kinko's". Police replied by fax asking for a new signature and when 41-year-old Olatunji Oluwatosin arrived to pick it up, the net closed. Oluwatosin claimed that he was picking the fax up for someone else, but was charged with six felony identity-theft counts and is currently in jail awaiting trial.

ChoicePoint "closed the suspect accounts, restricted access, strengthened site verification, informed law enforcement agencies and cooperated in their investigation" immediately following the fraud. It did not, however, email those in California whose data may have been compromised until last week - in accordance with a 2003 California law which obliges companies "which do business with residents" to inform them when their "unencrypted personal information was, or is reasonably believed to have been, acquired by an unauthorized person".

Specifically, the law demands that if a hacker gains access to data for 500,000 or more customers, the company must alert them via email, a "conspicuous" website posting and disclosure to a "major media outlet".

Since California is the only state which obliges firms to issue such warnings - and despite ChoicePoint spokesman James Lee's LA Times description of the fraud as "extraordinarily serious" - the company has not contacted potential victims elsewhere. However, the man in charge of Southern California's High Tech Task Force Identity Theft Detail, Robert Costa, told AP that he believes several other people were involved and that the attack "definitely could not have been limited to Southern California".

Nick Akerman, partner and co-chair of the computer fraud division of law firm Dorsey & Whitney, agreed, telling AP: "I've never heard of a hacker doing something just to make a company comply with a state statute - that's ridiculous." ®

Related stories

Feds probe huge California data breach
Hacker breaches T-Mobile systems, reads US Secret Service email
California indicts Russian hacker

Boost IT visibility and business value

More from The Register

next story
Secure microkernel that uses maths to be 'bug free' goes open source
Hacker-repelling, drone-protecting code will soon be yours to tweak as you see fit
How long is too long to wait for a security fix?
Synology finally patches OpenSSL bugs in Trevor's NAS
Roll out the welcome mat to hackers and crackers
Security chap pens guide to bug bounty programs that won't fail like Yahoo!'s
HIDDEN packet sniffer spy tech in MILLIONS of iPhones, iPads – expert
Don't panic though – Apple's backdoor is not wide open to all, guru tells us
Researcher sat on critical IE bugs for THREE YEARS
VUPEN waited for Pwn2Own cash while IE's sandbox leaked
Four fake Google haxbots hit YOUR WEBSITE every day
Goog the perfect ruse to slip into SEO orfice
Putin: Crack Tor for me and I'll make you a MILLIONAIRE
Russian Interior Ministry offers big pile o' roubles for busting pro-privacy browser
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Application security programs and practises
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Securing Web Applications Made Simple and Scalable
Learn how automated security testing can provide a simple and scalable way to protect your web applications.