Expensive ErrorsBy Deborah Gage | Posted 2005-12-13 Email Print
Modernizing Authentication — What It Takes to Transform Secure Access
ChoicePoint's security and accuracy snafus prompt lawsuits.
The total cost of all this bad data? The Data Warehouse Institute, a business intelligence and data analysis industry consortium, estimates that data errors are costing U.S. businesses about $600 billion a year. Companies without proper information management and controls are already spending 10% or more of their operating revenue on fixing problems that stem from bad data, according to Larry English, president of Information Impact, a consulting company that specializes in data quality.
ChoicePoint has data on more than 220 million U.S. citizensabout four of five Americans. That information has been used to help families find missing children, law enforcement officials track down criminals, and insurance companies offer quick policy approvals.
But all companies find it problematic to keep data secure and accurate, says Randy Bean, managing partner of NewVantage Partners, an information-technology consultancy that works with large companies such as Fidelity and Liberty Mutual Insurance. And ChoicePoint assumes that the facts it acquires on people are accurate when they arrive. "It is impractical to verify the accuracy of a record created by someone other than ourselves prior to the time the information is used in a report," wrote James Lee, the company's chief marketing officer, in an e-mail to Baseline.
Lee also argues that ChoicePoint is subject to the Fair Credit Reporting Act, which allows people to review and dispute information in their credit reports, and other consumer protection laws that govern the company's pre-employment, insurance-history and tenant-screening reports. For public recordssuch as those kept by government agenciesnot covered by these laws, ChoicePoint allows people a free search of public records once a year.
choicepoint strenuously guards details of its information gathering and processing procedures. Baseline's understanding of how the company works is based on court filings, company statements, and interviews with industry experts and company executives.
ChoicePoint feeds its huge databases with streams of data tapes and compact discs from insurance firms, marketing companies and other commercial sources, as well as public records such as court documents and licenses. But ChoicePoint verifies little of the data in its vast repositories.
Most of the company's systems are "fire and forget," says an industry expert with 20 years of experience in the kind of data brokering and data processing done by ChoicePoint. This means ChoicePoint simply loads data from outside sources into its system and moves on to the next task.
ChoicePoint does check these files for anomalies. For example, if an insurance company that regularly sends updated files with a small percentage of changessay, less than half a percentsuddenly sends a tape with more than 1% of the data changed, ChoicePoint will spot the jump and ask why.
But the company does not check any of the information that's supplied on tape by outside sources. "We do have a robust QA process to look for duplicate records and other anomalies, but at the end of the day, we have to rely on the organization that provided the information," Lee wrote in his e-mail message. "They created it and only they would know if it is accurate. Once they say it is, we have no basis or manner to challenge the assertion."
In addition to receiving data, ChoicePoint gathers data that it needs to build reports on individuals. The company says it has electronic gateways into some databases, such as some state motor vehicle department files. ChoicePoint also says it employs an army of researchers to verify information on, say, an employment form, and checks their work after it is completed.
And ChoicePoint says it puts the data it collects through a process known as data cleansing. The company uses Firstlogic's Information Quality Suite software, which can drill through files and look for inconsistencies and, in some cases, can fix problems automatically. The software, for instance, will check names and addresses against a U.S. Postal Service file to see if multiple files can be consolidated.
But no data-cleansing product will catch every inconsistency, according to English. In addition, much of what the researchers gather comes from public records, many of which contain errors.
And the way ChoicePoint's computer systems handle data may cause further inaccuracies.
For example, data suppliers in many cases send in new tapes and CDs with updates for ChoicePoint's CLUE database, which stores 200 million insurance records. The data is loaded when it comes in, and the old data is purged. If an error in a file isn't corrected at the source, the erroneous data will be reloaded into ChoicePoint's systems. As the data expert points out: "They simply replace data each month."