ChoicePoint Makes Fraud Detection Buy
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ChoicePoint, which had the personal information of 145,000 people pried from its grasp recently, has improved its ability to help financial service and insurance customers detect fraudulent activity.
The company, one of the largest data warehouses in the U.S., with Social Security numbers and credit reports on almost every American, said it acquired fraud-detection software maker Magnify, Inc.
Terms of the deal were not made public.
Magnify makes software that helps 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.
Magnify's technology is expected to help ChoicePoint's insurance carrier and financial services customers make significant inroads in fraud losses.
The buy is important for Alpharetta, Ga.-based, ChoicePoint, which had its credibility shattered this winter when it reported that it had accidentally sold personal information on at least 145,000 Americans to perpetrators posing as legitimate companies.
ChoicePoint spokesman Chuck Jones denied that the move was an effort to better endear ChoicePoint to the public in the wake of the fraud.
Jones said the deal "furthers ChoicePoint's acquisition strategy of acquiring companies that either add new technologies or new data sets, or new customers."
But there's no denying ChoicePoint is on its heels. A fraud detection purchase can show customers ChoicePoint is serious about shoring up customer data.
While there were few instances where consumer data was actually misused, the gaffe riled Congress. One week after the error, members of Congress called for hearings to decide what to do about the egregious mishandling of sensitive information.
Sen. Diane Feinstein (D-Calif.) used the ChoicePoint incident to fortify legislation she has already introduced to require data-collection companies to notify individuals if there is a breach in their data system. California is the only state to have such a law.
Sen. John Corzine (D-N.J.) proposed a bill that would require companies, including financial institutions and other commercial entities, such as third-party data collectors like ChoicePoint, to establish security systems to shield the personal information they maintain for their customers.
The house panel later heard support for federal legislation requiring data-collection companies to report security breaches to consumers.
Since reporting the theft in February, ChoicePoint has made significant changes to its business, halting the sale of Social Security numbers, drivers licenses and other sensitive data except in certain market segments.
ChoicePoint continues to support consumer transactions where the data is needed to nurture relationships, such as insurance, employment and tenant screening. It also provides authentication or fraud prevention tools to governments and large corporate customers where consumers have existing relationships.
The purchase of Magnify is expected to close in a few weeks. ChoicePoint
will retain all Magnify employees and the Magnify
headquarters, which is based in Chicago, Jones said.