Data brokers could face more regulation
ATLANTA — Data warehouser ChoicePoint Inc.’s stock price fell more than 9 percent on Tuesday amid predictions that a breach of company records that potentially affected more than 140,000 Americans will prompt tougher regulation of the data-brokering industry.
“This means they’re going to be subject to scrutiny,” said Daniel J. Solove, an associate professor of law at George Washington University Law School and author of “The Digital Person,” a book about data aggregators such as ChoicePoint.
“The days of these companies living in a hidden underworld of information mining, information use and information trafficking will end,” he said. “There will be more regulation and more rights for individuals.”
ChoicePoint’s share price tumbled $4.03, or 9.26 percent, on Tuesday to $39.47 in afternoon trading. The stock had traded at a 52-week high of $47.95 earlier in the month.
The company acknowledged on Feb. 15 that thieves apparently used previously stolen identities to create what appeared to be legitimate businesses seeking ChoicePoint accounts. They then opened up 50 accounts and received volumes of data on consumers, including names, addresses, Social Security numbers and credit reports.
The ring, which operated for more than a year before it was detected, used the information to defraud at least 700 people, according to California investigators.
ChoicePoint learned of the problem in October but did not notify 144,778 customers who were possibly affected until this month because authorities did not want to jeopardize their investigation, the company said.
On Monday, ChoicePoint released a state-by-state breakdown of people who may have been affected. The list also included people in the District of Columbia and three U.S. territories.
The company also announced plans to rescreen its 17,000 business customers to make sure each one is legitimate, and it said it has hired a retired Secret Service agent to help revamp its verification process including seeking more information from customers that can be used to validate their business status.
The company said it cannot be more specific than that about the changes because it doesn’t want to jeopardize security.
Formed in 1997 as a spinoff of credit reporting agency Equifax Inc., ChoicePoint has 19 billion public records in its database at its suburban Atlanta headquarters, including motor vehicle registrations, license and deed transfers, military records, names, addresses and Social Security numbers. The sheer size of its database makes it an industry leader in the data collection business.