Credit and personal information vendor ChoicePoint Inc. reported that it had spent $6 million in consequence of October 2004 data theft in the second quarter, which ended June 30. The second-quarter charge came on top of a $5.4 million charge the company had to take in the first quarter related to the same incident. That first-quarter expense included $2 million spent on communications to the affected consumers and for providing those people with credit reports and credit monitoring services. Approximately $3.4 million went for legal and professional fees. Thus private data leakage total cost ChoicePoint $11.4 million.
The private data theft, which touched all of adult USA population, got a lot of publicity in the end of February. ChoicePoint allowed a leak of confidential data about 145 000 USA residents, in all 50 states of the country. This way, the hackers got names, addresses, social insurance numbers, driver's license numbers, credit card usage information, and other public information, collected by ChoicePoint from open sources. The damage could have been a lot worse, since the company had access to 19 million entries, and, according to reports, kept data on every adult resident of the country.
The incident was made public in the end of February, although the leak occurred in October of 2004. Company representatives alerted Los Angeles police, because they believe that the leak occurred there. In November of 2004, California officials asked ChoicePoint to not make the affair public, because it could hurt the investigation. It is still unknown how the criminals gained access to the confidential data.
In May 2005 ChoicePoint announced that it acquired fraud-detection software maker Magnify, Inc. Its products help customers identify any suspicious activity and determine which courses of action will yield the greatest financial return. Magnify also makes analytics software called FraudFocus, which provides an ongoing status review within organizations. It is considered that the move was an effort to better endear ChoicePoint to the public in the wake of the fraud.
“Now we can evaluate the cost of private data leakage using exact financial figures – $11.4 million in 6 months. Even despite damage to ChoicePoint's image, it's a great expense”, - comments Denis Zenkin, the Marketing Director of InfoWatch company. “If the company had taken special measures to prevent data leakages (deploying software, implementing politics and procedures, etc.), it would have cost it 30 times less”, - he adds.
Source: COMPUTERWORLD
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