Data brokers didn't notify consumers of past breaches

Two large data brokers that recently reported data breaches potentially affecting hundreds of thousands of U.S. residents have been compromised in the past and have not notified victims, executives from the two companies told a U.S. Senate committee Wednesday.

Executives from ChoicePoint and LexisNexis, under questioning from Senator Dianne Feinstein, told the Senate Judiciary Committee that they did not report some data breaches to potential victims before a California law requiring notification went into effect in 2003.

A LexisNexis executive also told the committee that law enforcement agencies have reported 10 incidents of potential identify fraud, in which new e-mail or credit card accounts were opened, related to a recent LexisNexis breach where about 310,000 U.S. residents' records may have been compromised.

Feinstein, a California Democrat, and committee Chairman Arlen Specter, a Pennsylvania Republican, questioned the two companies' efforts to notify victims during recently announced breaches of their multibillion-record databases. The companies' databases contain personal information such as driver's license numbers and Social Security numbers.

Specter demanded that LexisNexis provide a detailed explanation in writing of why the company took until Tuesday to announce that 280,000 more U.S. residents may be victims of a recent breach, up from the 32,000 people the company identified in early March. LexisNexis began investigating the breach at its Seisint division, caused when thieves gained access to legitimate database passwords, in February, said Kurt Sanford, president and chief executive officer of U.S. Corporate and Federal Markets for LexisNexis.

"Didn't you know about the breach in February?" Specter asked.

"I didn't know what I had until I did an investigation, senator," Sanford answered.

Sanford didn't give an exact number, but he did say the company had some breaches it didn't report to potential victims before the California notification law went into effect. LexisNexis has uncovered 59 beaches, dating back to early 2003, due to the investigation started in February, Sanford said.

Victims of the LexisNexis breaches will get free credit report and credit monitoring services, free credit counseling services, and free identity theft insurance, Sanford said. "We will begin notifying those individuals immediately," he said.

In at least one case in 2001, ChoicePoint did not report a breach to victims because it was not told of the focus of a law enforcement investigation that uncovered the compromise, said Douglas Curling, president and chief operating officer at ChoicePoint.

"If it weren't for the California law, we would have no way of knowing the breaches that have occurred," Feinstein responded.

ChoicePoint has found 45 to 50 data breaches, mostly related to a scam it announced this year, Curling said. In that incident, identity thieves used IDs stolen from legitimate business owners to open bogus businesses that paid ChoicePoint for information such as driver's license and Social Security numbers. Up to 145,000 U.S. residents could be affected, ChoicePoint announced in February.