LexisNexis says its data was used by fraudsters

By , IDG News Service |  Security, data breach, fraud

LexisNexis acknowledged Friday that criminals used its information retrieval service for more than three years to gather data that was used to commit credit card fraud.

LexisNexis has started warning about 32,000 people that "a few" customers used its service to help them illegally obtain credit cards. "These individuals were operating businesses that at one time were both ChoicePoint and LexisNexis customers," the company said in a notification letter that it began sending out Friday.

To perpetrate the scam, the fraudsters would set up fake mail boxes and then use information obtained on LexisNexis to open credit cards in the victims' names. The criminals were able to obtain names, dates of birth, and even Social Security numbers from the data broker.

In 2006, ChoicePoint paid US$15 million to settle a lawsuit with the U.S. Federal Trade Commission after scammers allegedly used ChoicePoint's data services for ID fraud. LexisNexis's parent company, Reed Elsevier, purchased ChoicePoint last year for $4.1 billion.

LexisNexis apparently waited a long time to notify victims at the request of the U.S. Postal Inspection Service. The fraud was stopped on Oct. 10, 2007, LexisNexis said, but the breach notification letters were not sent out until now. A LexisNexis spokesman could not say definitively when the company became aware of the breach.

If LexisNexis withheld disclosure for a year-and-a-half it was "far too long," according to Beth Givens, director or Privacy Rights Clearinghouse. "A lot of damage can be done in 18 months," she said.

The U.S. Postal Inspection Service did not return calls and e-mail messages seeking comment Friday.

LexisNexis has tightened up the way it verifies customers since the incident, the company said in the notification letter.

LexisNexis was involved in other data breaches in 2005 and 2006, according to data from Privacy Rights Clearinghouse, a privacy watchdog group.

According to CBS News, which first reported the breach, another company, Investigative Professionals, was also hit by the scammers, who were ultimately able to obtain information on 40,000 victims, including those targeted using the LexisNexis data.

Investigative Professionals could not be reached for comment.

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