Expert on Detecting Identity Theft Reveals How Choicepoint Situation and Related Fraud Loses Could Have Been Prevented
How the Fraud Artists Used Alternate Addresses to Complete the Crime
ST. PAUL, Minn. --(BUSINESS WIRE)-- Feb. 23, 2005 — ChoicePoint Inc. might have been alerted to identity thieves if they had used available technology that detects address manipulations, according to Adam Elliott, an expert on solutions that help prevent and detect identity theft and fraud.
Reported Fact: ChoicePoint Inc., a data warehouse company, will now re-screen 17,000 business customers to make sure they are truly legitimate businesses and not criminals setting up false companies for the purpose of stealing consumers' personal data.
According to Elliott: ChoicePoint experienced a breakdown in its credentialing process – the process by which the company verifies a business customer and allows it access to its database. Fraud artists used the stolen identities of consumers to apply for access to the ChoicePoint system. They posed as owners of check-cashing outlets and debt-collection firms and became ChoicePoint customers.
"Companies like ChoicePoint would love to conduct more thorough background checks on business customers by visiting their place of business and meeting them in person. This is neither practical nor economical," said Elliott. "By looking at the address reported for the business, as well as the address reported as the related residential address, ChoicePoint would have spotted trouble. They could have taken steps to prevent this unfortunate incident." There are new technologies in the market that can help companies cost-effectively verify new customers to a much greater extent, Elliott explained. These technologies can compare the home address provided with the new business address and identify situations that require further investigation to rule out fraud. For example, does it make sense that John P. Consumer, who has an outstanding credit rating and owns a home in Colorado suddenly opens up a check-cashing outlet at a vacant lot in the greater Los Angeles area?
Reported Fact: Nearly 150,000 consumers may have had their identities stolen from ChoicePoint's data warehouse.
According to Elliott: Once the fraud artists obtained stolen consumer identities, they opened new accounts or took over the existing accounts of the victims. All this was accomplished by directing mail to alternate addresses – typically post boxes at packing and shipping companies. By comparing the commonly used address to the new address being supplied by the fraud artist, the identity thefts could have been prevented.
"Identity thieves don't receive mail at the victim's house,” Elliott said. “While identities are compromised each and every day, the one common element in virtually every identity theft is a change in address from that of the victim to that of the thief."
Technologies for detecting address manipulation have not yet been widely deployed, explained Elliott. However, their use should increase as a result of the FACT Act, which has new provisions that direct financial services companies and providers of data to verify the legitimacy of address changes.
"We know from extensive research that most identity theft cases could have been prevented if someone had paid attention to suspicious address activity," Elliott said.
About Adam Elliott
Elliott is president of ID Insight Inc. and has extensive experience in data warehousing, analytic modeling, identity verification and identity fraud detection. His company has developed patent-pending technology for identifying address manipulation. He is available for further comment on this topic at 651-343-5380 or 651-291-3557.
About ID Insight Inc.
This privately held identity theft detection company is located in St. Paul , Minn. Founded in 2002, ID Insight's patent-pending Address Differential (ADASM) solution is focused on detecting identity thefts where an address change is present. The service currently is available for financial services companies of all sizes in the United States.
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Media Contacts:
- Brian Bellmont for ID Insight, (952) 233-0428,
