U.S. SENATOR PATRICK LEAHY

Reaction Of Sen. Patrick Leahy (D-Vt.),
Ranking Member, Senate Judiciary Committee,
To SEC And FTC Investigations Of ChoicePoint
And ChoicePoint’s Change In Product Offerings
Friday, March 4, 2005

The fact that both the SEC and FTC are looking into ChoicePoint’s practices is welcome.  ChoicePoint was careless in the treatment of people’s sensitive personal data, and the decision of key executives to sell nearly $17 million of stock near the time of this breach raises grave questions about the circumstances of those sales.  Our upcoming Judiciary Committee hearing will let some sunshine in on these practices so the American people can know how their information is being collected, stored, sold and used, and so that Congress can consider the need for privacy and security rules to protect the public.

The ChoicePoint debacle spotlights the fact that highly personal information about each and every American is threatened today by too few safeguards against breaches like these that can instantly throw thousands of peoples’ lives into chaos.  The government is outsourcing more and more data analysis and security screening work to private data bureaus like ChoicePoint, which have grown exponentially in just the last few years.

Problems like these certainly raise questions about the way ChoicePoint and other data brokers are handling its contracts with the federal government that involve highly sensitive personal and financial information about millions of Americans.  A growing number of us in Congress intend to push hard to get answers to those questions.

ChoicePoint has told the public that the company had never had a similar problem before, but the facts tell a different story.  In 2002 ChoicePoint had sold sensitive personal data to a woman posing as a legitimate real estate business person, resulting in at least a million dollar loss due to fraudulent activity.  This was the same type of scam, and it appears that the company did not fully learn from this earlier mistake.  ChoicePoint is not alone; in the past two years, Acxiom has also had two security breaches.

It is high time for this industry to get serious about its security and privacy practices.  While ChoicePoint has now indicated that it will be pulling out of certain markets, the issues raised by this industry’s practices are much broader than this incident.  A single market shift does not satisfy all concerns, and the upcoming congressional inquiries* will help gauge the depth of these problems.

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*in the Senate Banking and Senate Judiciary Committees