ChoicePoint and other companies that amass consumer profiles should be forced by Congress to protect that information from identity theft, the head of the U.S. Federal Trade Commission said Thursday.
Existing laws are not strong enough to ensure that data brokers handle Social Security numbers and other sensitive details responsibly, FTC Chairman Deborah Platt Majoras told the Senate Banking Committee.
"I believe there may be additional measures that benefit consumers," Majoras said.
Congress is considering greater regulation of data brokers following a rash of break-ins and other data losses that have heightened concerns about identity theft, a crime that costs consumers and businesses $50 billion annually, according to FTC estimates.
ChoicePoint revealed last month that identity thieves had gained access to 145,000 consumer profiles, while rival data broker LexisNexis said Wednesday that a similar incident had placed 32,000 consumers at risk. Bank of America said in recent weeks it had lost a shipment containing sensitive details of 1.2 million government customers, including Senators.
At the hearing, the first of at least three scheduled on the topic, Democratic senators proposed several ways to ensure data brokers protect consumer information more thoroughly.
Sen. Jon Corzine of New Jersey said he would introduce a bill next week that would fine companies that do not comply with security standards developed by the FTC.
A bill drafted by New York Sen. Charles Schumer would require data brokers to screen clients and provide them with no more information than they need.
Vermont Sen. Patrick Leahy suggested the government--a major client of data brokers--withhold business from companies that do not measure up.
The FTC's Majoras said existing federal rules that require banks to take reasonable precautions to protect customer data should be extended to cover data brokers.
"We think that we ought to look at a broader security standard. As you say, we have a patchwork of laws today," she said.
Companies should also be required to notify consumers when their data has been exposed to identity thieves, she said.
ChoicePoint said last week it would scale back its data-selling activities. In written testimony, ChoicePoint Vice President Don McGuffey said the company supported congressional oversight and increased penalties for identity theft.
The hearing adjourned before McGuffey was able to testify.
Story Copyright © 2005 Reuters Limited. All rights reserved.
