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Identity
thieves use a scam to get thousands of files. Only Californians are
being notified.
By Joseph Menn, February 16, 2005, Los Angeles Times
A fraud ring infiltrated one of the nation's largest collectors of
consumer information and obtained credit reports, Social Security
numbers and other information about tens of thousands of people in a
massive case of identity theft.
ChoicePoint Inc. said Tuesday that it had begun sending letters to about
35,000 California residents to tell them that their personal information
may have been compromised. The Georgia company urged them to check their
credit reports for new accounts or suspicious activity.
The scope of the scam is likely to widen because California is the only
state that requires companies to notify people when the security of
their personal information is jeopardized.
A ChoicePoint spokesman said the number of victims nationwide could
total 100,000, but the company could not be sure of the extent of the
fraud and had no plans to contact people outside California.
"This is the worst in our seven years," said the spokesman, James Lee.
"This is extraordinarily serious."
Los Angeles County sheriff's investigators said they had identified 750
people whose personal data had been used to buy jewelry, consumer
electronics and computers. A North Hollywood man has been arrested, and
investigators are searching for other suspects.
Fewer than 10,000 credit reports were obtained in the yearlong scam, Lee
said. He refused to explain how the scammers circumvented rules that
require permission from the subject of a credit report to release the
data to a third party.
"Financial fraud is a pervasive part of our economy," Lee said. "The bad
guys are very bright, very smart and very committed."
Although not a household name, ChoicePoint maintains what it claims is
the largest collection of court records, addresses and other public data
on people in the country — some 19 billion records in all.
Insurance companies, banks, law enforcement agencies and many arms of
the federal government use ChoicePoint's data. Landlords rely on
ChoicePoint's databases to make decisions about prospective renters and
insurance companies use them to assess the risk of potential customers.
Last year, the company earned $148 million on revenue of $919 million.
Spun off from credit bureau Equifax Inc. in 1997, ChoicePoint has been
criticized by privacy advocates for not maintaining tighter control over
the data it compiles and sells.
"Our basic problem is that they circulate information that is even more
detailed than a credit report," said Marc Rotenberg, executive director
of the Electronic Privacy Information Center.
Identity theft is worsening, Rotenberg said, and "companies like
ChoicePoint are contributing to this problem."
Identity theft topped the list of consumer complaints to the Federal
Trade Commission in 2004 for the fifth straight year. By some estimates,
it costs consumers more than $50 billion a year, not counting the
considerable hassle of setting things right.
The rise of the Internet has made trafficking of personal information
easier. Organized criminal gangs routinely buy and sell credit card
information online, winning higher prices by attaching such personal
information as phone numbers and home addresses.
Lee said ChoicePoint maintained strict security standards, adding that
the flaws exploited by the scammers had been corrected. He provided few
details, except to say that ChoicePoint no longer accepted faxed copies
of business licenses.
ChoicePoint refused to detail the infiltration, which was detected in
October. A ChoicePoint employee noticed a suspicious application to open
a customer account, which enables users to search for background
information about people and to request credit reports from one of the
three major credit bureaus.
After the company compared notes with Los Angeles County sheriff's fraud
investigators, they determined that the problem was much bigger: At
least 50 suspicious accounts had been opened in the name of nonexistent
debt collectors, insurance agencies and other companies, said sheriff's
Det. Duane Decker.
According to ChoicePoint, the scam artists were a ring of serial
identity thieves. They used other people's information to invent
plausible businesses that withstood investigation.
Lee said he didn't know how names targeted by the ring were selected;
they had nothing obvious in common, such as high net worth or recent
transactions.
"There's no rhyme or reason" to the list, Lee said.
The investigation is focused in California, but Decker said the FBI and
U.S. postal inspectors also were working on the case. Federal spokesmen
didn't return a call seeking comment.
A break in the case came shortly after Los Angeles County sheriff's
detectives joined the investigation. After another suspicious
application for a ChoicePoint account came in by fax from a Southern
California Kinko's, investigators set up a sting operation. They sent a
responding fax asking for a new signature.
Olatunji Oluwatosin, 41, was arrested when he arrived to pick it up,
said sheriff's Lt. Robert Costa. Originally from Nigeria but living in
North Hollywood, Oluwatosin was charged with six felony identity-theft
counts. He was being held at the North County Correctional Facility in
lieu of $2-million bail.
Oluwatosin told investigators that he was the victim of mistaken
identity — he was picking up the fax for someone else.
Checking credit
People who receive a notice that their personal
information may have been compromised should check their credit report.
Californians have access to a free credit report annually. The reports
can be obtained by calling (877) 322-8228 or by visiting the website at
http://www.annualcreditreport.com. |