ChoicePoint's Comeback Tour

ChoicePoint, the massive data broker made infamous for selling 163,000 customer records to identity theft fraudsters, is on a comeback tour. On Sunday, the New York Times ran a 3,400 word piece extolling the company's new found embrace of privacy practices and its courting of longtime critics of its data practices. It's the best press the company's gotten since the Federal Trade Commission fined the company $10 million and required it to set aside an additional $5 million for victims of its negligence.

Just this week, ChoicePoint president Douglas Curling presented ChoicePoint's new image to law students at Stanford and Berkeley and met with lawyers at the online civil liberties group, the Electronic Frontier Foundation.

The rehabilitation project seems to be resonating. Law professor Daniel Solove, one of the company's harshest critics, told the New York Times that "I have to give them a lot of credit." Solove, along with Chris Hoofnagle – who hounded the company for its data practices when he worked at the Electronic Privacy Information Center –, met with Curling in March at the Computers, Freedom and Privacy Conference, where the company rented a suite in order to make its pitch to its critics.

At the time, Solove was wary of news getting out that he was meeting with ChoicePoint – not surprising given that he and Hoofnagle filed an FTC complaint about ChoicePoint in 2004. But now he's comfortable talking to the New York Times about the company's about-face.

What has convinced critics that ChoicePoint, which won a Lifetime Menace award in 2005 at the Big Brother Awards, has changed its ways?

More on what's changed and the long history that ChoicePoint wants you to forgive after the jump...

For one, the company decided post-breach to stop selling information to small businesses, such as private investigators, that it couldn't verify were legitimate. It also expanded the number of reports that individuals could check for errors – including its reports on insurance claims and tenant history. It's now supporting data breach legislation in Congress and donated $1 million to the Identity Theft Resource Center.

For years the company, which sells background checks on prospective employees to 55 of the Fortune 100 companies, barely bothered to verify its own customers, a lapse that allowed a Nigerian scammer in Los Angeles to buy data on thousands of Americans and commit identity fraud.

“It was a well-known fact back then that ChoicePoint would do business pretty much with anyone who came along,” said Robert Douglas, an information security consultant and editor of PrivacyToday who has done consulting work for ChoicePoint for several years. “They were making all the right noises about security but there wasn’t any follow-through to back up their words.”

Inside ChoicePoint, they like to say that the company is in the business of helping customers make informed decisions about whom they can trust. Insurance companies and banks use its databases to help them decide who is a good credit risk and who is not. ChoicePoint sells its services to employers screening new hires, to landlords running background checks on new tenants, and to the 7,000 law-enforcement agencies and governments worldwide that the company counts as clients. Other customers include bill collectors, private investigators and media outlets, including The New York Times.

Yet a company with the snappy motto — “smarter decisions, safer world” — failed to use its resources to assess and then protect itself from some of its own customers. In some cases, the F.T.C. found, individuals were granted accounts “notwithstanding the fact that ChoicePoint’s own internal reports on the applicant linked him or her to possible fraud.” The company continued to furnish consumer reports to customers, the commission said, “even after receiving subpoenas from law enforcement authorities between 2001
and 2005 alerting it to fraudulent accounts.”

Full story.

That's hardly all the controversies that ChoicePoint has been involved with. The company acquired massive databases on millions of Latin American citizens in order to sell them to the U.S. government, but may not have gotten the data legally.

The company, which vets insurance applicants for insurance companies, settled a lawsuit with those companies who alleged that ChoicePoint took the info they submitted for background checks and then resold the information as leads to other insurers. ChoicePoint paid out $14 million in cash and services in the settlement.

The company has attempted to buy motor vehicle registration records as part of a contract with the Department of Homeland Security, despite being fined more than $1 million by Pennsylvania for the way the company handled the records it bought from the state.

ChoicePoint, which thrives by emphasizing that we live in a dangerous world that is very different from the small town idyll that its CEO Derick Smith grew up in, also sold background checks in a box at Walmart's box stores.

The company has also been sued, successfully and unsuccessfully, by persons who lost jobs or job employment offers after the company's background checks included inaccurate information.

The company also has contracts with nearly every law enforcement and government agency, including the super-secretive Joint Terrorism Task Forces. Documents acquired by the National Journal's Shane Harris indicate ChoicePoint "agreed to provide access to an 'exclusive" system used to help identify terrorism suspects.'

On Tuesday, Curling dodged a question about the kind of work the company does for anti-terrorism operations, saying "I don't have a security clearance and don't want one."

Curling also said that society needed to learn to be more forgiving of past mistakes that come to light through background checks, but said that companies are afraid of hiring people with any spot on their record due to the threat of civil litigation.

That's a fine sentiment, and ChoicePoint is clearly hoping that the first one that gets to be forgiven for its past mistakes is itself. As for the Joes and Janes of the world who might have shoplifted or passed a bad check and can't get a job now, Curling suggested Tuesday that their forgiveness will have to wait for either litigation reform or a really tight job market.

Photo: Elijah Zarwan