ChoicePoint

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Template:Infobox Company ChoicePoint (Template:Nyse) is a corporation based in Alpharetta, near Atlanta, Georgia, USA, which claims to be the "nation's leading supplier of identification and credential verification services". According to the TSA, the firm keeps more than 17 billion records of individuals and businesses, which it sells to more than half of America's top 1,000 companies. It also contracts with over 7,500 state and local government agencies, including law enforcement.

ChoicePoint maintains a database of names, addresses, Social Security numbers, credit reports, and other sensitive information. Its DNA laboratory aided in the identification of victims of the WTC attacks, and data supplied by ChoicePoint was used in the Beltway Snipers investigation. Choicepoint also assisted the Transportation Security Administration in investigating 112,278 applicants. The US Department of Justice and the National Center for Missing and Exploited Children credit the corporation with assisting in the return of ~800 missing children.

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Controversies

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Major Security Breach in 2004

ChoicePoint announced in February 2005 that the personal information of at least 145,000 Americans from all 50 states has been breached. Thieves used previously stolen identities to create apparently legitimate businesses seeking ChoicePoint accounts. Over the course of more than a year [1], they then opened about 50 accounts and received personal information on consumers including names, addresses, and identification numbers. The old-fashioned scheme, that did not involve any hacking, allowed each fake company account to collect "just enough data to fly under the radar" [2] in order to facilitate "at least 750 cases of identity theft" [3].

Congressional hearings on the breach have revealed that ChoicePoint disclosed in recent SEC filings that it was only looking for victims from the data leak incident whose information had been stolen after July 1, 2003, the effective date of a California law requiring that victims of personal information breaches be notified [4]. Members of Congress rebuked the company for selling such information and have proposed federal privacy reforms.

A 41-year-old Nigerian citizen, Oluwatungi Oluwatosin, was arrested in October with five cell phones and three credit cards that belonged to other people, according to investigators. He was sentenced by the Los Angeles County Superior Court in February to 16 months in prison.

The ordeal has so far cost ChoicePoint 11.4 million USD--about 2 million USD in notifying victims of the incident, and the remaining 9.4 million USD in "legal and professional fees". However, the corporation's stock remains stable at 40 cents/share--the same as a year ago. The company announced in March 2005 that it will spend between 15 and 20 million USD in total during the 2005 fiscal year to prevent further breaches and to reduce earnings by 10 to 12 cents per share.

According to the Associated Press, ChoicePoint suffered a previous similar, less publicized, ID theft in 2002. Allegedly the suspects, also of Nigerian origin, pulled a similar scam of establishing fake businesses in order to make between 7,000 and 10,000 inquiries on names and Social Security numbers to commit at least 1 million USD in fraud [5].

In January of 2006, as a result of the 2004 breach, ChoicePoint was fined $15 million by the Federal Trade Commission. $10 million was a civil penalty and $5 million was to be used to pay victims of the security breach. In addition, ChoicePoint was required to take steps to better secure customer identities. [6]

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Florida Voter File Contract

In 1998, the state of Florida signed a 4 million USD contract with Database Technologies (DBT Online), which later merged into ChoicePoint, for the purposes of providing a central voter file listing those barred from voting. As of 2002, Florida is the only state which hires a private firm for these purposes. Prior to contracting with Database Technologies, Florida contracted with a smaller operator for 5,700 USD per year. The state of Florida contracted with DBT in November 1998, following the controversial Miami mayoral race of 1997. The 1998 contracting process involved no bidding and was worth 2,317,800 USD.

ChoicePoint has been criticized, by many critics of the 2000 election, for having a bias in favor of the Republican Party, for knowingly using inaccurate data, and for racial discrimination. Allegations include listing voters as felons for alleged crimes said to have been committed several years in the future. In addition, people who had been convicted of a felony in a different state and had their rights restored by said state, were not allowed to vote despite the restoration of their rights. (One should note Schlenther v. Florida Department of State (June 1998) which ruled that Florida could not prevent a man convicted of a felony in Connecticut, where his civil rights had not been lost, from exercising his civil rights.) Furthermore, it is argued that people were listed as felons based on a coincidence of names, despite other data (such as date of birth) which showed that the criminal record did not apply to the voter in question.

Journalist Greg Palast has shown that the firm cooperated with Florida Governor Jeb Bush, Florida Secretary of State Katherine Harris, and Florida Elections Unit Chief Clay Roberts, in a conspiracy of voter fraud, involving the central voter file, during the US Presidential Election of 2000. The allegations charge that 57,700 people (15% of the list), primarily Democrats of African-American and Hispanic descent, were incorrectly listed as felons and thus barred from voting. Palast estimates that 80% of these people would have voted, and that 90% of those who would have voted, would have voted for Al Gore. The official (and disputed) margin of victory, in the election, was 537 votes.

ChoicePoint Vice President Martin Fagan has admitted that at least 8,000 names were incorrectly listed in this fashion when the company passed on a list given by the state of Texas, these 8,000 names were removed prior to the election. Fagan has described the error as a "minor glitch". ChoicePoint, as a matter of policy, does not verify the accuracy of its data and argues that it is the user's responsibility to verify accuracy.

On April 17, 2000, at a special Congressional hearing in Atlanta, ChoicePoint Vice-President James Lee testified that Florida had ordered DBT to add to the list voters who matched 80% of an ineligible voter's name; middle initials and suffixes were to be dropped, while nicknames and aliases were added. In addition, names were considered reversible, for example; Clarence Thomas could be added in place of Thomas Clarence. Lee opened his testimony by noting that ChoicePoint intended to get out of the voter purge industry. Then, on February 16, 2001, DBT Senior Vice-President George Bruder testified before the US Civil Rights Commission that the company had misinformed the Florida Supervisors of Elections regarding the usage of race in compiling the list. Greg Palast concludes, "An African-American felon named John Doe might wipe out the registration of an innocent African-American Will Whiting, but not the rights of an innocent Caucasian Will Whiting." Palast believes that 80% of the 57,700 people allegedly barred from voting were African-American.

For more information regarding the voter file in the context of the 2000 election controversy, see Florida Central Voter File, 2000 Florida Election Controversy.

In January 2000, Pennsylvania terminated its contract with ChoicePoint after alleging that the firm had illegally sold citizens' personal information.

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DBT contract with the FBI

DBT Online was founded by Hank Asher as Database Technologies. The group once had a data management contract with the FBI, however, this was terminated following allegations that Asher was associated with Bahamian drug dealers. (1 p.18)

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Corporate governance

As of 2003, ChoicePoint's CEO is Derek V. Smith, who has held that position since 1997. In 2002, ChoicePoint generated earnings of ~200 million USD on revenue of ~791 million USD. The company employs ~3,500 people at 52 locations within 26 states.

DBT competes with Seisint, Asher's later creation. Seisint was sold to LexisNexis earlier this year (2004) for 775 million USD.

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Media Links

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External links

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