Is National Security Compromised by ID Theft?

Or, Is Americans' Privacy Threatened by Private Databases? Or Both?

By James R. Hood
ConsumerAffairs.com

February 28, 2005
Are terrorists targeting the financial affairs of current and former U.S. national security employees? Or, equally frightening, are private data-brokers gathering more information than they can be trusted to handle wisely?

ChoicePoint • Lexis-Nexis Parent To Buy ChoicePoint • ChoicePoint Settles Data Breach Lawsuit • More ChoicePoint Identity Theft Victims Identified • ChoicePoint Settles With Attorneys General Over Data Breach • FTC Finally Sets Up Redress For ChoicePoint Victims • ChoicePoint Names a "Consumer Advocate" • FTC Fails To Pay Victims Of ChoicePoint Data Breach • ChoicePoint Gets a Makeover • Data Blunders Cost ChoicePoint $15 Million • Guilty Plea in ChoicePoint Data Theft • ChoicePoint Finds More Cases Of Illegal Data Access • ChoicePoint Responds • PATRIOT Act Further Empowers ChoicePoint • Previous Data Thefts Went Unreported • Consumers Will Be Able to See Their ChoicePoint Records, Company Says • Nigerian Sentenced to Prison in ChoicePoint Theft • State Tally of ChoicePoint Victims • ChoicePoint Breach Worse Than First Reported • Is National Security Compromised by ID Theft? • States Demand ChoicePoint Notify ID Theft Victims • Private Information Stolen from Nationwide Consumer Database

Bank of America has lost computer tapes containing credit card information that exposes some of the most powerful men and women in the country to identity theft -- or worse.

The tapes contain the personal financial information, Social Security numbers, home addresses and phone numbers of more than 60 U.S. senators as well as employees of more than two dozen federal agencies, including the three main military branches, NASA, the Department of Energy and the Department of Justice, government officials said.

Sen. Elizabeth Dole, R-NC, was likely one of the senators whose personal information was on the tapes lost by the North Carolina-based bank, her press secretary said.

Dole "certainly thinks it's an unfortunate incident but it appears Bank of America has handled the situation appropriately," spokeswoman Lindsay Taylor told the Charlotte Observer.

Sen. Pat Leahy, D-Vt., is also among the senators whose personal information is on the missing tapes, spokeswoman Tracy Schmaler said. Leahy has called for congressional hearings on companies that gather and sell personal information,

Sen. Charles Schumer, D-NY, has said that the data tapes were likely stolen off a commercial plane by baggage handlers. But Schumer would not rule out the possibility that terrorists might be involved.

"Whether it is identity theft, terrorism, or other theft, in this new complicated world baggage handlers should have background checks and more care should be taken for who is hired for these increasingly sensitive positions," he said.

ChoicePoint - The Government's Surrogate

Of perhaps greater concern is the more widespread and serious security breach at ChoicePoint, a private database that collects and stores information on virtually every American, much of which it sells to government security, intelligence and law enforcement agencies who are prohibited from collecting such data.

ChoicePoint allowed criminals to access information on nearly 145,000 Americans, including sensitive financial information and Social Security numbers.

ChoicePoint has been portrayed as a larger version of the three national credit reporting agencies. But it is much more than that, and its clients are not just financial institutions, insurers and potential employers.

In fact, a large portion of ChoicePoint's business comes from government contracts, many of them with agencies whose activities and budgets are secret. It even operates private Web sites -- such as www.cpgov.com -- that can be accessed only by government agents.

Through its contracts with the federal government, ChoicePoint has acquired sensitive information on many present and former national security employees. Several former national security employees have indicated they were notified by ChoicePoint that their own sensitive financial information was part of the theft.

But while it's possible that national security officials were the targets of the ChoicePoint thefts, it's worth noting that ordinary Americans are also at risk of being harmed by legally obtained information that may or may not be accurate.

The information gathered by ChoicePoint and its competitors, including LexisNexis, are used not only for credit ratings, background checks and criminal investigations but even for such basic decisions as who is allowed to vote.

In the 2005 election, Mark Frost of Tampa, Fla., a businessman and father of two was turned away from a polling place. An election worker told him that he was a convicted felon and thus not allowed to vote.

In fact, Frost was a victim of a bungled attempt by election officials to use a private data contractor to weed out ineligible voters, according to Robert O’Harrow, author of No Place to Hide (2005), a behind-the-scenes look at the world of private data contractors.

Getting Around The Privacy Act

The federal government has turned to commercial databases for information because it is not allowed to collect such data. In 1974, Congress passed the Privacy Act, which made it illegal for the government to operate its own "Big Brother" database.

But Congress did not restrict private companies from conducting surveillance and gathering data on individual Americans. Nor did it prohibit the government from buying that information.

Sure enough, 32 years later, government has at its fingertips an amazing array of information on each and every American citizen -- the very information that Congress felt must be absolutely protected against government snooping.

As "private" companies, ChoicePoint and its competitors are almost completely unregulated. They can gather as much information as they want and do with it virtually whatever they want. The companies claim they have internal safeguards against any improper use or release of the information.

But there are those for whom such assurances ring hollow, among them John W. Whitehead, a constitutional attorney and president of Virginia's Rutherford Institute.

"In light of their recent security breach ... one must wonder just how good a job of self-regulation ChoicePoint is doing. Since the public cannot access the government sites, who knows just what information ChoicePoint has on individuals?" Rutherford asked in a recent column on his organization's Web site.

"Even the sites the public can access make self-checking very complicated. There is simply no way to ensure that ChoicePoint is staying within its self-imposed regulations," Rutherford said.

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