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ChoicePoint faces class action lawsuit it claims is baseless, association contemplates what action to take

Two insurance producers have filed a class action lawsuit against ChoicePoint Inc., ChoicePoint Services Inc., ChoicePoint Online and certain officers and directors, alleging, among other things, that the provider of identification and credential verification services routinely sells customer data despite assuring that privacy will be maintained.

Producers Miguel Rodriguez of Wizard Insurance in Chatsworth, Calif., and Deane Silke of Fiesta Auto Insurance in Long Beach, Calif., allege that ChoicePoint “made material misrepresentations and/ or omitted to make material disclosures throughout the class period by falsely claiming that ChoicePoint would protect and insure the confidentiality of information plaintiffs and other class members were required to provide to ChoicePoint, including confidential, proprietary and trade secret information from their customer lists and other related proprietary information, in order to obtain information regarding available insurance coverage and insurance policy premium quotations, as well as actual insurance policies for their customers.”

The lawsuit also alleges that “(i)nstead of maintaining the confidentiality of that information, ChoicePoint revealed that information to third parties, including the competitors of plaintiffs and other class members, and sold that information to third parties for profit.” The plaintiffs believe the company’s practices violate the Uniform Trade Secrets Act and California Civil Code, and are unlawful, unfair and fraudulent business acts and practices, and unfair, deceptive, untrue or misleading advertising in violation of California Business and Professional Code 17200, the court documents state.

ChoicePoint, however, calls the lawsuit “frivolous, baseless and defamatory.”

“ChoicePoint does not in any way use, sell or otherwise share personally-identifiable consumer information provided by our insurance agent or broker customers for use in lead generation (marketing) products,” said James E. Lee, ChoicePoint senior vice president, in an exclusive to Insurance Journal. “We will move aggressively to have this complaint dismissed and seek sanctions against the attorneys who brought it for failure to properly investigate the charges they are making.

“The lawsuit alleges that we misused confidential information despite the fact that the two plaintiff agents have never used the ChoicePoint product (CPLink) they cite in the complaint,” Lee continued. “We believe this complaint was filed to help the plaintiffs recruit new members for the insurance agents’ association to which they belong and to damage ChoicePoint’s business by spreading false information about our company.”

Rodriguez and Silke are board members of the Latin American Agents Association. The association claims it was instrumental in bringing parties together to assist in launching the lawsuit.

The LAAA said the practice of providing data to third parties, data which agents disclose to entities such as ChoicePoint to successfully use the service, only to have the information used to solicit these consumers is concerning. Lead generation is a costly yet vital part of the agency business. With identity theft a major concern, the association said individual privacy should be maintained.

“All producers know how much a successful lead costs them. To have it re-sold off out from under us and given to our competitors so they can send our own new customer a new offer seems simply an unfair practice,” Rodriguez commented.

LAAA said the plaintiffs allege the company promised that information provided by users — in this case insurance producers — “would only be disclosed to third parties in order to complete the transaction.”

“This lawsuit is long overdue, and we hope it will be the first step towards stopping this type of abuse,” Silke said.

Because Rodriguez and Silke also are members of The Alliance of Insurance Agents and Brokers, “Alliance leaders are considering whether to launch the association’s own legal action against ChoicePoint, or join in the current class action suit,” the Agents Alliance indicated in its Oct. 15 newsletter.

“These are some serious allegations that could impact many agents and brokers,” the association wrote.

In the meantime, the Alliance indicated its legal team has crafted a letter that is being disseminated to California insurance carriers “to uncover the extent to which ChoicePoint has sold confidential information such as policy expiration dates to competing insurance entities.”

“These issues are exceedingly troubling,” the Alliance letter states. But the group’s leaders noted “before we take any steps to pursue our legal rights, and those of our members and/or customers, we want to be certain of the facts we will be dealing with.”

“We look forward to the opportunity to vindicate our practices and reputation in court,” ChoicePoint’s Lee said.

A copy of the lawsuit is available at: http://latinagents.com/ Poster/Complaint.pdf. A copy of the Alliance letter is available at www.agentsalliance.com/
articles/119,1.html.

Topics Lawsuits California Agencies