Security threats Toolkit

ChoicePoint counts the cost of security problems

Tags:
ID Theft

Joris Evers CNET News

Published: 21 Jul 2005 09:05 BST

Data broker ChoicePoint took a $6m (£3m) charge in its second quarter to cover costs related to the leak of information on about 145,000 Americans, it said on Wednesday.

The charge is in addition to the $5.4m in costs the company recorded in the first quarter. Of the total $11.4m, about $2m in charges up to June 30 were for communications to individuals whose data has been exposed as well as credit reports and monitoring services for those people, the company said in a statement.

The remaining $9.4m was for legal and other professional fees, ChoicePoint said.

ChoicePoint revealed in February that scam artists had gotten access to personal data on tens of thousands of Americans, resulting in at least 750 cases of identity theft. The scandal has prompted calls for new legislation to protect consumers' privacy rights.

Despite the charges, ChoicePoint's quarterly profit was little changed from a year ago. Second-quarter net income was $36.4m, or 40 cents a share, compared with $36.3m, or 40 cents a share, a year earlier. Current second-quarter results included a charge of 4 cents per share to cover the special charges related to the data leak.

ChoicePoint overhauled its business to prevent a breach from happening again. These changes are expected to cost between $15m and $20m in sales during 2005 and to reduce earnings per share by 10 cents to 12 cents, the company said in March.