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.
