Identity theft victims to be compensated

Companies may have an additional incentive to make sure that the personal information they keep of clients and customers is not stolen by identity thieves. The Federal Trade Commission (FTC) has mailed reimbursement claim forms to more than 2,400 consumers who may have been victims of identity theft owing to alleged security lapses at data broker ChoicePoint. In December 2006, the Commission mailed claim forms to 1,400 consumers who were identified with the assistance of law enforcement, with instructions on how to file a claim. In April 2007, 1,500 consumers were identified and contacted. The FTC also has created a Web site where consumers who do not receive a letter can download a claim form and obtain information about the claims process.

ChoicePoint compiles and sells personal information, and in 2005 it announced that it had sold information about many consumers to people who turned out to be identity thieves. The FTC, the nation’s consumer protection agency, investigated the ChoicePoint security breach and alleged that, in some cases, these sales resulted in identity theft. The FTC and ChoicePoint reached a settlement requiring the company, among other things, to pay $5 million to be used to reimburse consumers for expenses due to identity theft caused by ChoicePoint’s security breach.

The FTC-ChoicePoint settlement may serve as a model for future instances of identity theft. It stipulates that consumers who have out-of-pocket expenses due to identity theft caused by the ChoicePoint security breach will be compensated. The amount applicants receive will depend on a number of factors, including the total number and amount of claims that the agency receives.