March 2, 2005

Dear Senator Nelson,

Consumers Union, the non-profit independent publisher of Consumer Reports ®, strongly supports your efforts to protect consumers from identity theft. The bill you are introducing, The Information Protection and Security Act, will protect consumers by establishing critical preventive standards for information brokers.

The need for this bill has received recent national attention as a result of the recent ChoicePoint and similar ID theft scandals. As you know, reports released in early February indicated that the personal and financial information of approximately 145,000 consumers was accessed by thieves through ChoicePoint, Inc. databases. This was not an isolated incident. According to news reports of March 2, 2005, ChoicePoint had been the source of compromised information for thieves arrested in 2002 who were responsible for losses of over $1 million. The continued tide of security breaches illustrates just how vulnerable consumers are to having their private information fall into the wrong hands.

Though numbers released by the Federal Trade Commission indicate that 27.3 million Americans have been victims of identity theft in the last five years, costing businesses and financial institutions $48 billion, with additional costs to consumers, current law does not do enough to protect consumers. For example, the immensity of the ChoicePoint breach illustrates the problem that there are presently no standards requiring an information broker to properly protect the security of the personal information it holds, nor requirements to adequately screen the persons to whom the broker provides information.

Your bill will protect consumers in several important ways. It accomplishes this by directing the FTC to promulgate strong rules including the following:

• Rules that ensure that information brokers provide consumers with individual access to personally identifiable information;

• Rules that provide individual rights to correct erroneous information;

• Rules that require information brokers to maintain and enforce security procedures developed by the FTC; and

• Rules that require information brokers to develop customer screening procedures that meet standards to be developed by the FTC to assure data security.

Information brokers have access to our most private personal and financial information. Consumers Union supports your bill because it protects consumers – who are increasingly aware of their vulnerability to ID theft, and of the impact that information brokers have on their economic lives – by providing needed oversight for information brokers.

Sincerely,

Gail Hillebrand
Senior Attorney

Chanelle Hardy
Esther Peterson Fellow