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State will pay $500 Thousand to Atone for Identity Breach News for Public Officials March-21-07 The Milwaukee Department of Revenue will have to anti up more than a half million dollars to atone for a security breach that may have put 171,000 taxpayers at risk of identity theft. The money will be paid to provide credit monitoring for people whose Social Security numbers were accidentally printed on tax booklets. So far, 25,857 people have signed up for credit monitoring under a program offered by the state, which will cost the state $536,425. That number could climb to more than $677,000 because people can sign up for the program until March 31. The problem began late last year when the company that prints tax forms for the state inadvertently included Social Security numbers on the front of about 171,000 booklets, making it possible for identity thieves to see them. The Department of Revenue was not supposed to provide the numbers to the printer and has since reclaimed from the company computer files with the sensitive data. The state cut a deal with the printer, Ripon Community Printers, in January that requires the firm to pay $110,000 toward the credit monitoring. The balance - $536,425 so far - will fall to the Department of Revenue. Last January, the Department of Revenue estimated they would have to pony up $232,000 at most because they expected no more than 8% of affected people to sign up for credit monitoring. So far, more than 15% have done so. Audra Brennan, the executive assistant to Revenue Secretary Roger Ervin, told reporters with the Milwaukee Sentinel that the turnout was higher than expected because of how the state followed up with those affected. "We really tried to make sure we reached out to people and tried to make it easy for them to access the service," she said. Sen. Ted Kanavas (R-Brookfield) said the department should have anticipated a higher response rate and forced the printer to pay a percentage of the total rather than a firm amount. "That's just bad management on the part of the agency," he said. People who were affected had until March 1 to call the Department of Revenue to get a personal identification number that allows them to sign up for credit monitoring by Equifax. But the program may offer little comfort or real protection to affected individuals. A recent study of 11 credit monitoring services provided by banks, credit bureaus and other financial institutions revealed that these services typically offer strong fraud detection capabilities — largely through email alerts that flag unusual activity on existing accounts — but generally fail to prevent new account fraud that costs an estimated $24.6 billion annually in the U.S. The study recommended fraud alerts as an alternative to credit monitoring. Only a handful of companies are currently offering fraud alerts as part of identity theft protection programs. James Van Dyke, President and Founder of Javelin Strategy & Research said, “This study shows that services like LifeLock that are designed to prevent rather than detect unauthorized activity can make a clear difference in stopping fraudulent new account transactions before the problem occurs.” In addition to offering credit monitoring to affected individuals, the department is hiring a privacy protection officer; beefing up its training on taxpayer confidentiality; and reviewing whether sensitive data has been released to vendors in other cases. Sen. Alberta Darling (R-River Hills) said the Department of Revenue has no option but to pay the bill. "They're the ones who made the mistake, so there's no way out," she said. LifeLock protects your identity even when your Social Security number is compromised.
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