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A consumer reporting agency that failed to properly screen prospective customers and, as a result, sold at least 318 credit reports to identity thieves, has agreed to settle Federal Trade Commission charges that it violated federal law. Under the settlement, the company and its principal must ensure that they provide credit reports only to legitimate businesses for lawful purposes, use a comprehensive information security program, and obtain independent audits every other year for 20 years. The settlement also imposes a $500,000 penalty but suspends payment due to the defendants' inability to pay. According to the FTC, the defendants use sensitive financial data from other consumer reporting agencies to create reports that landlords use to assess potential renters. These reports contain consumers' names, Social Security numbers, birth dates, bank and credit card account numbers, credit histories, and other personal information. The Commission alleges that the company failed to properly screen new customers. The company allegedly requested only publicly-available information from applicants seeking credit reports, and it did not request supporting documentation to establish that an applicant was actually a landlord renting property. As a result, identity thieves posing as property owners were given an account with unlimited online access to credit reports, and the account was used to access at least 318 reports containing sensitive personal information. The FTC charged the defendants with violating the Fair Credit Reporting Act (FCRA) by furnishing credit reports to persons who did not have a permissible purpose to obtain them, and by failing to maintain reasonable procedures to prevent such impermissible disclosures and to verify their customers' identities and how they intended to use the information. The agency also charged them with violating the FTC Act by failing to employ reasonable and appropriate security measures to protect sensitive consumer inform

In all of 2008, 40 banking institutions failed - 25 banks and 15 credit unions. So far in 2009, 72 institutions have either been closed or taken over by regulators, including 7 banks just this past weekend. The Federal Deposit Insurance Corporation (FDIC)'s troubled bank list, now at 305, has more than doubled from last year's total, when 117 banks were listed. Which begs the questions: Where and why are all these institutions failing, and how many more closures will we see by year's end? Failures by the Numbers Analysis of this year's bank/credit union failures (see interactive map) reveals some interesting facts: * Total Failed Banks: 64 * Total Failed Credit Unions: 8 o Top States For Failures: o Georgia - 16 banks o Illinois - 12 banks o California - 8 banks, 3 credit unions o Florida - 3 banks * Largest Failure BankUnited, Coral Gables, FL., $12.8 billion in assets, * Total Cost to FDIC Insurance Fund: $13.553 billion

Is your bank on the list?

Failed Banks Thirty-six banks have failed this year, up from the 25 that shut down in 2008, which included Washington Mutual, the largest bank failure in US history. While the banks that have closed this year are not as large as WaMu, there have been some substantial banks that failed with assets in the billions. Click on to find out which of them rank as the 10 largest failures so far in 2009. Source: FDIC Posted June 4, 2009 »Slideshow: Largest Bankruptcies »Slideshow: World's Safest Banks

"Data broker ChoicePoint, the victim of a 2004 data breach affecting more than 160,000 U.S. residents, has agreed to strengthen its data security efforts and pay a fine for a second breach in 2008, the U.S. Federal Trade Commission said Monday. ChoicePoint, now a subsidiary of Reed Elsevier, will pay US$275,000 to resolve the newest FTC complaint. The FTC accused the company of failing to implement a comprehensive information security program to protect consumers' personal information, as required by the agency after the 2004 breach. The April 2008 breach compromised the personal data of 13,750 people, the FTC said in a press release. ChoicePoint turned off a "key" electronic security tool used to monitor access to one of its databases, and failed to detect that the security tool was turned off for four months, the FTC said. For a 30-day period, an unknown hacker conducted thousands of unauthorized searches of a ChoicePoint database containing sensitive consumer information, including Social Security numbers, the FTC said. After discovering the breach, the company notified the FTC. If the software tool had been working, ChoicePoint likely would have detected the intrusions "much earlier," the FTC said. "

Payment processor Heartland Payment Systems has been sued over a data breach it disclosed publicly on Inauguration Day last week. The lawsuit, filed on Tuesday in U.S. District Court in Trenton, N.J., alleges that Heartland failed to adequately safeguard the compromised consumer data, did not notify consumers about the breach in a timely manner as required by law, and has not offered to compensate consumers for costs they may incur in protecting themselves from identity fraud. In a statement that coincided with President Barack Obama's inauguration events, Heartland said the breach occurred last year but that it found evidence of the intrusion only in the previous week and immediately notified law enforcement and credit card companies. Heartland was alerted in late October to suspicious activity surrounding processed card transactions by Visa and MasterCard and hired forensic auditors who uncovered malicious software that compromised data in the company's network, said Robert H.B. Baldwin Jr., chief financial officer of Heartland, last week. The lawsuit seeks damages and relief for the "inexplicable delay, questionable timing, and inaccuracies concerning the disclosures" with regard to the data breach, which is believed to be the largest in U.S. history. Heartland executives have declined to specify how many consumers or accounts were affected. The company handles 100 million transactions per month for more than 250,000 merchants. The lawsuit, first reported by SearchSecurity news site, also accuses Heartland of negligence in taking more than two months to determine the existence and scope of the breach and criticizes the company for failing to identify which merchants were affected by the breach. The suit was filed on behalf of Woodbury, Minn., resident Alicia Cooper, who was notified last week by her credit union that a card associated with her account was included in the breach. It seeks class action status. A Heartland spokesman said the company could no

Premier Election Solutions (formerly Diebold Election Systems) admitted in a state hearing Tuesday that the audit logs produced by its tabulation software miss significant events, including the act of someone deleting votes on election day. The company acknowledged that the problem exists with every version of its tabulation software. The revelation confirmed that a problem uncovered by Threat Level in January, and reiterated in a report released two weeks ago by the California secretary of state's office, has widespread implications for election jurisdictions around the country that use any version of the company's Global Election Management System (GEMS) software to tabulate votes. "Today's hearing confirmed one of my worst fears," said Kim Alexander, founder and president of the non-profit California Voter Foundation. "The audit logs have been the top selling point for vendors hawking paperless voting systems. They and the jurisdictions that have used paperless voting machines have repeatedly pointed to the audit logs as the primary security mechanism and 'fail-safe' for any glitch that might occur on machines. To discover that the fail-safe itself is unreliable eliminates one of the key selling points for electronic voting security."

The Federal Trade Commission today approved a final consent order settling claims that CVS Caremark violated customers' privacy and the Health Information Portability and Accountability Act (HIPAA) when it failed to dispose of records properly last year. Earlier this year, CVS Caremark agreed to settle FTC charges that it failed to take reasonable and appropriate security measures to protect the sensitive financial and medical information of its customers and employees, in violation of federal law. In a separate but related agreement, the company's pharmacy chain also has agreed to pay $2.25 million to resolve Department of Health and Human Services allegations that it violated HIPAA regulations. "This is a case that will restore appropriate privacy protections to tens of millions of people across the country," said FTC chairman William Kovacic following the settlement. "It also sends a strong message to other organizations that possess consumers' protected personal information. They are required to secure consumers' private information." Under the final consent order, CVS Caremark is required to rebuild its security and confidentiality program, which will be audited every two years for the next 20 years. The HHS settlement requires the company to develop a new training program to instruct employees on how to handle patient data.

The Kaiser Permanente hospital in Bellflower has been hit with a $187,500 fine for failing for a second time to prevent unauthorized access to confidential patient information, state pubic health officials said today. [Updated at 3 p.m.: A spokesman for the hospital said the fine was part of the ongoing investigation into employees improperly accessing the medical records of Nadya Suleman and her children. Disciplinary action has been taken against the employees, said Jim Anderson, a hospital spokesman. All the incidents occurred in January; a previous post said they had occurred in April and May.] State officials said Kaiser Permanente Bellflower Medical Center compromised the privacy of four patients when eight employees improperly accessed records. This is the second penalty against the hospital, officials said. The hospital was fined $250,000 in May for failing to keep employees from snooping in the medical records of Nadya Suleman, the woman who set off a media frenzy after giving birth to octuplets in January. The fine was the first penalty imposed and largest allowed under a new state law enacted last year after the widely publicized violations of privacy at UCLA Medical Center involving Farrah Fawcett, Britney Spears, California First Lady Maria Shriver and other celebrities. "We are very concerned with violations of patient confidentiality and their potential harm to the residents of California," said Dr. Mark Horton, director of the California Department of Public Health. "Medical privacy is a fundamental right and a critical component of quality medical care in California."

In this video, Andre Gold, vice president and CISO of MoneyGram International, will discuss the basics of disaster recovery and business continuity planning, and define several general terms associated with disaster recovery and business continuity planning to help organizations develop a more accurate understanding. The text transcript of Gold's comments is included below. Andre Gold: Over the past four to five years, I've spent a lot of time in disaster recovery and business continuity planning as part of my role as the chief risk officer as well as the CISO for a couple major organizations. During that time, in working with those firms, I've had a greater appreciation of disaster recovery and business continuity planning, and I've learned that although BCP and DR are very important to firms, when its actually time to execute upon those respected strategies, many firms fail, and they fail fundamentally because they lose sight of the core elements of disaster recovery and business continuity planning. And with that, it's those core elements that we will be discussing today.

America's civil engineers think the nation's aging and rusty infrastructure is just not making the grade. The American Society of Civil Engineers issued an infrastructure report card Wednesday giving a bleak cumulative ranking of D. "We've been talking about this for many many years," Patrick Natale, the group's executive director, told CNN. "We really haven't had the leadership or will to take action on it. The bottom line is that a failing infrastructure cannot support a thriving economy." Video Watch what the report had to say » The ranking -- which grades the condition of 15 infrastructure entities such as roads, bridges and dams -- is the same as the the last time such a report was issued, in 2005. In 2001, the grade was D+, slightly better but still poor. Roads got a D-, with Americans spending more than $4.2 billion a year stuck in traffic. "Poor conditions cost motorists $67 billion a year in repairs and operating costs. One-third of America's major roads are in poor or mediocre condition and 45 percent of major urban highways are congested," the engineers' report said. Drinking water, D-. "America's drinking water systems face an annual shortfall of at least $11 billion to replace aging facilities," the report said. "Leaking pipes lose an estimated seven billion gallons of clean drinking water a day." Inland waterways, D-. "The average age of all federally owned or operated locks is nearly 60 years, well past their planned design life of 50 years. The cost to replace the present system of locks is estimated at more than $125 billion." Wastewater systems, D-. "Aging systems discharge billions of gallons of untreated wastewater into U.S. surface waters each year." Don't Miss * Congress looks to boot zoos, golf from infrastructure list Levees, D-. Many levees are locally owned and maintained, but they are aging and their "reliability" is not known. "With an increase in development behind these levees, the risk to public health and safety from f

Privacy & security are individual rights and responsibilities, not just corporate or governmental responsibilities. Reliance on technology is bound to fail without motivation for all involved to find mutual benefits.

Identity theft and security is always in the spotlight through the constant stream of news stories about companies losing confidential customer or client data, such as social security numbers, credit card numbers, health histories and so forth. These "breaking news" stories now seem to happen so frequently that we scarcely pay attention to them unless, of course, we are directly impacted by them. They have, however, heightened the public awareness and have even spawned new identity protection businesses. Information technology companies rightly react to this by developing new technologies to improve security and eagerly market these to CIOs as a way to protect the personal information of their customers and clients. While we should use these appropriately, we can't rely just on technology for identity protection. While some of these security incidents involve someone hacking into a system, many involve a human failing. Examples include a laptop with confidential information being lost or stolen and employees e-mailing sensitive data to their personal e-mail accounts so they can work on it from home.

The same Facebook that unites far-flung grandparents with newborn grandchildren and helps liberate the oppressed can also shatter lives and destroy careers with the click of a Send button. The same Twitter that is indispensible to the young can be utterly extraneous to their elders.

"The inspector general of the National Archives and Records Administration is investigating a potential data breach affecting tens of millions of records about U.S. military veterans, Wired.com has learned. The issue involves a defective hard drive the agency sent back to its vendor for repair and recycling without first destroying the data. The hard drive helped power eVetRecs, the system veterans use to request copies of their health records and discharge papers. When the drive failed in November of last year, the agency returned the drive to GMRI, the contractor that sold it to them, for repair. GMRI determined it couldn't be fixed, and ultimately passed it to another firm to be recycled. The incident was reported to NARA's inspector general by Hank Bellomy, a NARA IT manager, who charges that the move put 70 million veterans at risk of identity theft, and that NARA's practice of returning hard drives unsanitized was symptomatic of an irresponsible security mindset unbecoming to America's record-keeping agency."

"In a sign that state attorneys general may be flexing the HIPAA enforcement muscle granted by the HITECH Act provisions in the Recovery Act, the Connecticut and Arizona attorneys general are investigating health plans that recently experienced data breaches that they failed to disclose for several months. Typically, state attorneys general prosecute only violations of state laws, but they now have authority to investigate and levy fines for violations of HIPAA and the HITECH Act, which requires mandatory notifications within two months of knowledge of a breach. Connecticut Attorney General Richard Blumenthal (D) has emerged as possibly the first AG to take on a HIPAA investigation, and Arizona's AG may also be pursuing a similar course. The larger of the two breaches that have come to the AGs' attention was experienced by Health Net, Inc., which lost a portable external hard drive containing seven years of data for 446,000 Connecticut residents. The lost data came from 1.5 million individuals in total, who also hailed from New Jersey and New York. Health Net reported the loss to the Connecticut AG on Nov. 19, and on the same day Blumenthal issued a scathing statement demanding answers and promising action. He specifically said he was investigating whether Health Net may have violated "federal laws," as well as his state's own data protection laws."

"The attempted attack on a Detroit-bound flight last week, along with the events preceding and following it, has provided a snapshot of the ongoing struggle to balance civil liberties and national security. President Obama on Tuesday admitted a "systemic failure" on multiple levels in the run-up to the attempted bombing. Suspect Umar Farouk Abdulmutallab was in a terror database of more than a half-million people but was not on a "no-fly" list. The administration has initiated a review of airport security and the watch-list system in the wake of the failed plot. But so far, analysts say what happened is emblematic of the struggle between privacy and security interests. "It's just (an) inability to understand the right way to strike the balance that's at fault," said constitutional attorney David Rivkin. Airlines don't have access to the government's comprehensive terrorist database. They screen travelers based on the smaller, "no-fly" list."

Perhaps this is more a question of trust (not privacy) versus security. Do we really trust our government and its agents to handle private information securely?

"A Texas bank is suing a customer hit by an $800,000 cybertheft incident in a case that could test the extent to which customers should be held responsible for protecting their online accounts from compromises. The incident, which was first reported by blogger Brian Krebs this week, involves Lubbock-based PlainsCapital bank and its customer Hillary Machinery Inc. of Plano. In November, unknown attackers based in Romania and Italy initiated a series of unauthorized wire transfers from Hillary's bank accounts and depleted it by $801,495. About $600,000 of the amount was later recovered by PlainsCapital. Hillary demanded that the bank repay it the rest of the stolen money. In a letter to the bank in December, Hillary claimed that the theft happened only because PlainsCapital had failed to implement adequate security measures. PlainsCapital promptly filed a lawsuit in the U.S. District Court for the Eastern District of Texas asking the court to certify that its security procedures were "commercially reasonable." In its complaint, the bank noted that it had made every effort to recover the stolen money."

Bank sues theft victim in pre-emptive strike

"A new report from Javelin Strategy and Research suggests that many credit and debit card holders fail to understand the importance of a notice saying that a credit card or debit card has been breached and do not protect themselves from fraud. The company's research found that people notified of a breach of their secure data were four times as likely as the public at large of actually experiencing financial or other fraud within a year of the notification. Further, those who experienced a breach in their secure data and then an incident of fraud very rarely link the fraud to the breach. "Among consumers who received a data breach notification in the past 12 months, 19% suffered fraud, yet only 2% attributed their fraud to a data breach, the firm reported. "It seems as if consumers are not connecting the dots on data breach notifications to fraud events. They are aware, in the abstract, some personal records of theirs have been compromised, but when they become a victim of fraud they do not make the connection to the breach notification.""

Data security represents both a new market opportunity to sell insurance coverage and a new risk - especially for independent insurance agencies that may not be compliant with data security laws or have plans in place to protect their own companies from data breaches. While data security is an evolving issue, failing to protect data can have a huge financial impact on a company. The average total per-incident cost of a data security breach was $6.65 million, compared to an average per-incident cost of $6.3 million in 2007, according to the "U.S. Cost of Data Breach Study" conducted by data protection company PGP Corp. and information management research firm The Ponemon Institute. The PGP/Ponemon study indicated that data breach incidents cost U.S. companies $202 per compromised customer record in 2008, meaning that companies incur additional costs with an abnormal churn in lost customers. More than 84 percent of data breach cases in 2008 involved organizations that had more than one data breach. And, more than 88 percent of all cases in the study involved insider negligence. The cost of lost business continued to be the most costly effect of a breach, averaging $4.59 million or $139 per record compromised. Lost business now accounts for 69 percent of data breach costs, up from 65 percent in 2007, compared to 54 percent in the 2006 study. "After four years of conducting this study, one thing remains constant: U.S. businesses continue to pay dearly for having a data breach," said Dr. Larry Ponemon, chairman and founder of The Ponemon Institute. "As costs only continue to rise, companies must remain on guard or face losing valuable customers in this unpredictable economy." Includes video: Data Security Creating Insurance Agent Sales Opportunities

Companies that track consumer behavior on the Web for targeted advertising without proper consent are near their "last chance" to self-regulate, the head of the U.S. Federal Trade Commission said on Monday. Privacy advocates say regulations on big phone and Internet companies, such as AT&T Inc and Google Inc, are too lax, giving the firms excessive control over consumers' personal information. "From my perspective, the industry is pretty close to its last clear chance to demonstrate" that it can police itself, FTC Chairman Jon Leibowitz told the Reuters Global Financial Regulation Summit in Washington. Earlier this year, the FTC issued new guidance urging websites to tell consumers that data is being collected during their searches and to allow them to opt out. If companies fail to do a better job of making their privacy policies understandable to the average person, momentum will keep building for greater regulation, Leibowitz said. "It's really up to industry."

European Union's move indicates growing government concern over how Internet companies are using individuals' private data The European Commission began legal action against the U.K. Tuesday over its failure to protect Internet users from Phorm -- a covert behavioral advertising technology tested by the U.K.'s biggest fixed line operator, BT, in 2006 and 2007. The move signals growing concern in Brussels over the way new Internet-based technologies are using people's personal data. In addition to taking legal action against the U.K., the Commission also issued a general warning to all 27 E.U. countries to uphold privacy laws, especially regarding social-networking Web sites and users of RFID (radio frequency identification) technologies. In Canada, the federal government has even proposed a legislation that will provide law enforcement agents sweeping powers to obtain user information from ISPs. The Commission, the executive body of the European Union responsible for upholding laws, said the U.K. had failed to enforce E.U. data protection and privacy rules, because broadband Internet subscribers were not informed that their browsing was being tracked.