Feds to compensate ChoicePoint victims

Feds to compensate ChoicePoint victims

By Sarah D. Scalet

April 01, 2006 — CSO —

Identity theft

In January, the Federal Trade Commission levied a landmark $15 million penalty against data broker ChoicePoint because it allowed criminals posing as businesses to access the personal data of 163,000 consumers. Of that sum, $5 million is being used to create a fund for victims of fraud or identity theft due to the data breach. Now, the FTC needs to find victims, quantify losses and answer a $5 million question: How much will it take to compensate victims of such a massive breach?

"Victims are protected by federal law from having to pay the fraudulent charges, so the loss is primarily of time," says Beth Givens, founder of the nonprofit Privacy Rights Clearinghouse.

But Chris Keller, an attorney with the FTC's new Division of Privacy and Identity Protection, says that with a very narrow exception, the fund cannot be used to reimburse victims for lost time or other intangibles. Attorneys at the FTC are still working out exactly which losses will be covered. One qualified expense: the cost of credit monitoring for victims who discovered the fraud before ChoicePoint notified them of the breach and offered free credit monitoring. Another: victims' unpaid time off from work. Still a question mark: legal fees.

Meanwhile, the FTC is working with law enforcement and creditors to determine exactly whose information has been misused. Of particular concern are the 10,000 consumers for whom ChoicePoint gave out full credit reports.

Such data "permits the identity thief to see if a person's identity is worth stealing," Keller says. "My expectation—and this gets into the realm of speculation—would be that those 10,000 [identities] would either be used fairly quickly or not at all."

Read more about data protection in CSOonline's Data Protection section.

Other stories by Sarah D. Scalet

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