Feeds

ChoicePoint fined $15m over data security breach

800 hit by ID theft

Protecting users from Firesheep and other Sidejacking attacks with SSL

Data broker ChoicePoint was yesterday fined $15m over a data security breach that led to at least 800 cases of identity theft. ChoicePoint agreed to pay $10m in civil penalties (a record fine) and $5m to compensate consumers as part of a settlement with US consumer watchdog the Federal Trade Commission (FTC). It also agreed to maintain a revamped security program, featuring regular third-party security audits until 2026, and promised to ensure it provides consumer reports only to legitimate businesses for lawful purposes.

Fraudsters got the opportunity to purloin credit reports, social security numbers and other sensitive information of more than 163,000 consumers on ChoicePoint's database after scammers successfully made bogus applications to establish accounts with the credit reference firm. Given the potential for abuse the number of ID thefts has actually been quite low, but this does not excuse ChoicePoint of data security incompetence.

Fraudsters gained access to the records by making bogus applications to set up more than 50 ChoicePoint accounts, which then allowed them to trawl ChoicePoint's database. ChoicePoint acts as a credit reference agency whose legitimate clients include landlords, the US Government and credit card firms.

The FTC alleges that ChoicePoint failed to screen prospective subscribers and turned over consumers' sensitive personal information to obviously dubious subscribers. ChoicePoint approved the applications of individuals who lied about their credentials and used commercial mail drops as business addresses. Scammers reportedly used the same fax machines at public locations to send multiple applications for purportedly separate companies, a factor the FTC reckons ChoicePoint ought to have picked up as suspicious.

Worse still, ChoicePoint failed to tighten up its application procedure even after receiving subpoenas from law enforcement authorities alerting it to fraudulent activity going back to 2001. The FTC charged that ChoicePoint violated the Fair Credit Reporting Act (FCRA) by furnishing consumer credit histories to dodgy subscribers without properly checking their identity. ChoicePoint was further accused of making false and misleading statements about its privacy policies. ChoicePoint agreed to settle these charges for $15m without admitting any wrongdoing.

"The message to ChoicePoint and others should be clear: Consumers' private data must be protected from thieves," FTC chairman Deborah Platt Majoras said. "Data security is critical to consumers, and protecting it is a priority for the FTC, as it should be to every business in America."

ChoicePoint's shares closed $3.35 (or 7 per cent) down at $29.95 on news of the FTC settlement on Thursday. ®

The next step in data security

More from The Register

next story
Israeli spies rebel over mass-snooping on innocent Palestinians
'Disciplinary treatment will be sharp and clear' vow spy-chiefs
Infosec geniuses hack a Canon PRINTER and install DOOM
Internet of Stuff securo-cockups strike yet again
THREE QUARTERS of Android mobes open to web page spy bug
Metasploit module gobbles KitKat SOP slop
'Speargun' program is fantasy, says cable operator
We just might notice if you cut our cables
Apple Pay is a tidy payday for Apple with 0.15% cut, sources say
Cupertino slurps 15 cents from every $100 purchase
YouTube, Amazon and Yahoo! caught in malvertising mess
Cisco says 'Kyle and Stan' attack is spreading through compromised ad networks
Hackers pop Brazil newspaper to root home routers
Step One: try default passwords. Step Two: Repeat Step One until success
Greater dev access to iOS 8 will put us AT RISK from HACKERS
Knocking holes in Apple's walled garden could backfire, says securo-chap
prev story

Whitepapers

Providing a secure and efficient Helpdesk
A single remote control platform for user support is be key to providing an efficient helpdesk. Retain full control over the way in which screen and keystroke data is transmitted.
Saudi Petroleum chooses Tegile storage solution
A storage solution that addresses company growth and performance for business-critical applications of caseware archive and search along with other key operational systems.
Security and trust: The backbone of doing business over the internet
Explores the current state of website security and the contributions Symantec is making to help organizations protect critical data and build trust with customers.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.