One of world's biggest collectors of consumer data has agreed to pay $275,000 after federal authorities accused it of exposing the personal information of 13,750 people.
The payment, which settles charges the Federal Trade Commission brought against Choicepoint, amounts to just $20 per exposed consumer. The breach was the result of someone at the company inadvertently turning off a database monitoring system. Unknown intruders then accessed social security numbers and other details by conducting unauthorized searches.
Choicepoint's gaffe came even as the company was under court-ordered monitoring for a separate security lapse in 2005 that led to at least 800 cases of identity theft, according to the FTC. A year later, Choicepoint paid $15m and promised to implement procedures ensuring that consumer reports were provided only to legitimate businesses for lawful purposes. The data collector also agreed to regularly get independent assessments of its data security program through 2026.
Despite the ongoing scrutiny from the FTC, the Choicepoint employee switched off an electronic monitoring system designed to identify unauthorized access to customer accounts. During one of the four months the system remained inactive, unauthorized individuals used stolen credentials to look up personal information on 13,750 consumers listed in Choicepoint databases, according to the FTC.
Choicepoint, which is owned by Reed Elsevier, blamed the breach on a former government customer that failed to protect a user ID and password used to access its database. Its statement didn't explain why the monitoring system was shut off, but it maintained that the company remained fully compliant with its 2006 settlement agreement with the FTC.
The settlement came on Monday, a day before the FTC announced settlements in two other cases that harmed consumers.
The agency said the second-biggest US money transfer service had agreed to pay $18m to settle charges it turned a blind eye to crooked telemarketers who defrauded consumers out of more than $84m. Minnesota-based MoneyGram International also agreed to implement a comprehensive program to root out fraud and to perform background checks before hiring agents.
From 2004 to 2008, con artists bilked the people by calling them and claiming they had won lotteries or been awarded guaranteed loans but needed to pay taxes or insurance fees before they could collect. MoneyGram was chosen as the payment method because it allowed the scammers to pick up the transferred funds immediately and payments were often untraceable. Victims also have no chargeback rights or other recourse, according to the FTC.
The agency on Tuesday also said a children's clothing marketer has agreed to pay $250,000 for collecting minors' personal information without first getting their parents' permission. Iconix Brand Group had required customers to disclose a wide variety of details to receive updates or enter contests, according to the FTC. That included date of birth, full name, email address, mailing address, gender and phone number.
Iconix had collected the information since 2006. The practice violated the Children's Online Privacy Protection Act, the FTC said. ®
This article was updated to reflect that the $275,000 Choicepoint was required to pay was not a fine. Language was also added to reflect company comments that the fraud monitor was accidentally disabled by an employee and that the breach took place during a single month. A Choicepoint spokesman claims an FTC press release is incorrect in saying the 2005 breach resulted in 800 cases of identity theft.