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ChoicePoint Tries To Clamp Down

The data broker ChoicePoint Inc., whose massive consumer information file was recently breached, said Tuesday it has hired a top official at the government agency that oversees airport screening to review how the company screens its customers.

The Alpharetta, Ga.-based company said Carol A. DiBattiste, deputy administrator of the Transportation Security Administration, has been appointed as the company's chief credentialing, compliance and privacy officer.

She will lead an independent office in Washington that will oversee improvements in ChoicePoint's screening process and implementation of procedures to expedite the reporting of incidents.

ChoicePoint said in a statement that DiBattiste also will oversee efforts to expand a program that involves site visits to make sure customers are who they say they are. A spokeswoman declined to comment beyond the statement and said chief executive Derek Smith was out of the office and unavailable for comment Tuesday.

The company announced last month that the personal information of 145,000 Americans may have been compromised in a breach in which thieves posing as small business customers gained access to ChoicePoint's database. Authorities say at least 750 people were defrauded in the scam. The fiasco has fueled consumer advocates' calls for federal oversight of the loosely regulated data-brokering business, and Capitol Hill hearings are due to be scheduled on the issue.

ChoicePoint shares fell 13 cents, or 0.3 percent, to $37.92 in early trading Tuesday on the New York Stock Exchange, near the low end of the 52-week range of $36.35 to $47.95. The company's shares have fallen about 17 percent since the breach, uncovered last fall, was announced Feb. 15.

The Securities and Exchange Commission and Federal Trade Commission have launched investigations of ChoicePoint in the wake of the scandal.

ChoicePoint's decision to hire DiBattiste was wise, said Bruce Simpson, an analyst with William Blair & Company in Chicago. "I feel like the extent to which this particular incident has ballooned was beyond the extent of any prior inquiries by law enforcement and, therefore, when I see them moving to tighten up customer credentialing, I feel like that is an appropriate response," he said.

DiBattiste, who will report to the company's board of directors, will also be responsible for helping to establish policies regarding the company's compliance with local, state and federal privacy laws, regulations and company policies.

A former undersecretary of the Air Force, DiBattiste also served as director of the Executive Office for U.S. Attorneys, deputy U.S. Attorney for the Southern District of Florida, assistant U.S. Attorney, and was one of the Air Force's top prosecutors.

ChoicePoint collects data on individuals, including Social Security numbers, real estate holdings and current and former addresses. It has about 19 billion records, and its customers include insurance companies, financial institutions and federal, state and local agencies.

Meanwhile in Los Angeles, a Nigerian national who used personal information obtained from ChoicePoint and other companies in 2002 to commit identity theft was sentenced to 5 1/2 years in federal prison.

Besides his term, Adedayo Benson, 38, was ordered Monday to pay nearly $155,000 in restitution to 10 financial institutions by U.S. District Judge Gary A. Feess, federal prosecutors said in a statement.

Authorities say Benson, of the Encino, Calif., area, was involved in a nationwide credit card scam.

Benson opened "mail drops" to which he redirected mail from victims' credit card companies, then used the cards to make fraudulent purchases and get cash advances.

Investigators have declined to say whether the 2002 scam and the recent breach of ChoicePoint's database are connected.