Tuesday, June 21, 2005

New York Times Bashes "Smug, Self-Regulated, Industry"

"The New York Times" today comes out swinging at holders of personal information that resist all regulation and have a cavalier attitude toward safeguarding personal information. They basically endorse a national security breach notification law and further regualtion along the lines of the Schumer-Nelson bill, previously discussed here.

Editorial: "The New York Times"

June 21, 2005


"The breathtaking success of data thieves in exposing 40 million credit cardholders to the risk of fraud is only the latest evidence that Congress urgently needs to force standards and safeguards on the feckless world of consumer-data gathering. Roughly 200,000 of the accounts were reported stolen outright after a credit card processing company, CardSystems Solutions, improperly retained masses of data in vulnerable files as filchers moved in. The explanation from this member of a smug, self-regulated industry: "We should not have been doing that."

Horror stories grow by the day. CitiFinancial disclosed that unencrypted computer tapes for 3.9 million customers were lost by a package deliverer. Crooks were easily able to buy the data of 145,000 consumers from ChoicePoint, the nation's largest broker of personal information. In the hands of thieves, consumer data becomes liquid assets and must be guarded as such by companies that are now far too phlegmatic about security.

If it were not for California's pioneering law requiring notice to affected consumers, the rest of the nation might not have even heard warnings of how their assets and identities are increasingly at risk. Senator Dianne Feinstein, Democrat of California, is proposing a national requirement for consumer notification, with civil damages for negligent companies. Her bill is a good start in conjunction with a comprehensive measure by Senators Charles Schumer of New York and Bill Nelson of Florida to begin regulating data merchants by requiring registration with the Federal Trade Commission. It would adopt stronger safeguards, stop the easy access to Social Security numbers and help identity theft victims regain their fiscal balance.

Credit-card companies and information brokers - not consumers and merchants - bear prime responsibility for the ravages of data thieves."


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