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Feds Make Progress with Fund for ChoicePoint Victims (But Barely)

Almost 10 months after a settlement that established a $5 million redress fund for consumers impacted by the ChoicePoint privacy breach, the U.S. Federal Trade Commission (FTC) is about to start collecting information on what the breach actually cost identity theft victims.

By Sarah D. Scalet

November 15, 2006 — CSO — Almost 10 months after a landmark settlement that established a $5 million redress fund for consumers impacted by the ChoicePoint privacy breach, the U.S. Federal Trade Commission (FTC) is about to start collecting information on what the breach actually cost identity theft victims.

The FTC also has spent the first part of the $5 million fund, not on consumer compensation but on a contract "redress administrator" who will help gather data and crunch numbers about costs incurred by the victims.

Jessica Rich of the FTC’s Bureau of Consumer Protection said the agency has been working with law enforcement to identify who among the 163,000 consumers affected had actually become victims of identity theft. She said the FTC’s original estimate that 800 people had their personal information misused has not changed, but that the process has taken longer than anticipated because of the difficulty in tracing identity thefts back to the ChoicePoint breach.

"We believe that 800 is still about the number," Rich said. "It could be give or take some, but that’s the number we’re working with." Rich hopes the agency will start mailing letters to those people within "a few weeks," asking them to describe their monetary losses. The FTC also will post a notice on its website advising victims who do not receive a letter on how to apply for compensation.

The commission decided against sending letters to all 163,000 consumers affected when ChoicePoint, the Alpharetta, Ga.-based data broker, sold personal data to criminals posing as small businesses. "We believe that if we send out notices to the likely victims, it will be a much more targeted way to ensure that the right consumers get the money," Rich said.

Rich still does not know exactly what expenses will be covered, including whether victims will be repaid for legal fees. "We’ll have to see what consumers tell us they incurred," she said, noting that the FTC will be looking for "tangible harm related to identity theft," such as expenses associated with new lines of credit opened in the victims’ names.

"Hopefully we’ll have enough money to cover it all, but we may not," Rich said. "If we don’t, we’ll have to figure out how to allocate the money."

Mari Frank, an attorney who runs the website Identitytheft.org and has written several books on the subject, indicated frustration at how long the process was taking and how narrowly the FTC seemed to be defining damages.

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