Privacy invasion behemoths ChoicePoint and LexisNexis have lost control of sensitive data in the past, but deliberately covered it up because no law required them to come clean, executives from both outfits confessed Wednesday during Senate Judiciary Committee hearings on the recent epidemic of ID theft plaguing the USA.
Numerous past breaches went without notification, ChoicePoint President and COO Douglas Curling admitted under questioning from Committee Chairman Arlen Specter (Republican, Pennsylvania). Curling explained that after notifying the relevant law enforcement authorities, "no one was made aware; law enforcement didn't tell us anything." The ChoicePoint person in contact with law enforcement simply didn't appreciate the importance of the situation, he whinged.
Specter wondered aloud how a company official with enough authority to serve as liaison to law enforcement in such a matter could fail to appreciate its significance and inform others. "I can't explain it," Curling allowed. However, there have been only "45 or 50 breaches," in all, he added.
LexisNexis has also experienced a slew of security breaches followed by a slew of cover-ups, division CEO Kurt Sanford admitted. "All but 4 or 5 of the breaches were due to compromised passwords," he noted.
Speaking of the most recent debacle, in which the personal records of 310,000 victims fell into the hands of potential ID thieves, he said that the first irregularities surfaced in February of 2004. Specter wondered why it should have taken until April of 2005 for the public to be notified, but Sanford, for all his obvious intelligence and business acumen, was unable to explain this.
The admissions - under oath, finally - that these companies gladly covered up their blunders and misdeeds, until required by California law to notify victims, proves that regulation is essential to keeping them honest.
Unfortunately, when no California residents are affected by such an incident, the public has no guarantee that the truth will ever emerge. Vermont Attorney General William Sorrell emphasized that point, saying that without the California disclosure law, ChoicePoint and LexisNexis would likely never have notified anyone outside of law enforcement.
Sorrell observed that ID theft can be especially crippling because it's an attack on credit availability, and for most Americans, access to credit is more valuable than their other assets (rather a sad comment on US economics when you think about it). He urged Congress follow California's lead in requiring notification of important data security breaches. But the regs should be crafted to let states be more protective if they wish. "Federal legislation should be a floor, not a ceiling," he advised.
The notoriously toothless US Federal Trade Commission (FTC) is the watchdog apparent for any such regulatory regimen. After all, FTC is the outfit that discovered in 2003 that 10 million people, or 4.6 percent of the adult population, had become victims of identity theft in a single year, and has yet to do anything to impede it. Still, FTC Chairwoman Deborah Platt Majoras advised the Committee to avoid over-notification. "Consumers will become numb to notices," she said.
Actually, she has a point. When the California disclosure law forced ChoicePoint to notify victims of its blunders and negligence, most had no idea that they had a very important, albeit involuntary, "business relationship" with the outfit, and tossed the notices in the bin unopened, assuming them to be junk mail.
Clearly, something needs to be done, and Congress appears ready to get ready to talk about it for a while. Senator Specter even warned the panel that there will be "some very firm federal legislation coming out of this issue," although we will withhold judgment until we see it.
Regulation may be all well and good, but Congress mustn't toss out the baby with the bath water, industry reps insisted. As Kurt Sanford explained, commercial spy outfits like LexisNexis play a vital role in recovering exploited children, and, of course, in fighting terrorism. The fact that al Qaeda might be crawling all over their databases is a minor issue when you consider the myriad benefits of mass privacy invasion, making the lives of every citizen utterly transparent.
ChoicePoint's Douglas Curling agreed. The company provides services that create a safer, more secure American society, he boasted. ChoicePoint helps consumers, and helps the government to protect citizens while at the same time preventing fraud. Con artists may own their databases, but they can always tell you if a prospective employee really has earned the credentials he claims.
How did we ever get along without these guys? ®