ChoicePoint to Sell Less Consumer Data

ChoicePoint's CEO Derek Smith said Friday that the company will no longer sell consumer data to a customer unless there is a direct benefit for the consumer whose information is being requested, or it supports a governmental or criminal justice purpose.

"These changes are a direct result of the recent fraud activity, our review over the past few weeks of our experience and products, and the response of consumers who have made it clear to us that they do not approve of sensitive personal data being used without a direct benefit to them," Smith said.

Friday's move is due to an incident in October where some 145,000 people had their information accessed. Nearly 50 fake companies had been set up to access the information, through which data was compromised.

The company says the switch to the new policy will be completed in about three months, and could affect some of its customers, primarily small businesses.

The decision will also have a significant effect on the company's stock price and bottom line; the rule change is expected to cost the company $15 to 20 million and effect earnings per share by 10 to 12 cents.

On a related note, it was also announced Friday that the Securities and Exchange Commission was investigating the selling of stock by ChoicePoint's top two executives. The executives likely knew of the impending announcement that the company's data had been compromised. ChoicePoint, meanwhile, maintains the stock sales were part of a prearranged plan.