Calif. Mulls $13 Million DMV Penalty For Allstate

Bill Branch, a DMV spokesperson, said the action against Allstate was triggered by a local police department investigation. Mr. Branch said he did not have the name of the municipality where the investigation began last year, but that the case involved a threatening letter that was sent to a motorist whose home address had been gained through Allstate's access to the DMV data.

DMV records are open to the general public, but home address records were restricted in 1990 after the 1989 murder of actress Rebecca Schaeffer by an obsessed fan who had obtained her address from DMV.

Mr. Branch said when police notified DMV of the Allstate leak, an audit was done which turned up 131 security violations. Allstate like other carriers is permitted access to DMV records for limited business use under a confidentiality agreement.

According to DMV, some Allstate employees generated phony file numbers to request driver information and, supposedly, secure access passwords to the system were stuck on computers with Post-It Notes in plain view.

DMV said that it had audited seven Allstate claims offices, but called company violations "system-wide." Mr. Branch said in some cases auditors were denied inspection access required by contract or ordered to leave in the middle of an audit.

The maximum penalty for each civil violation is $100,000. "Potentially they could be liable for up to $13 million in civil penalties," Mr. Branch said. "What exact amount in penalties we will seek remains to be determined." The department will be in court within a week and a half, he said.

He said the department had been discussing Allstate's infractions with company officials since last April.

Emily Daly, an Allstate spokesperson, released a statement saying the company "regrets that its security and customer confidentiality procedures, including the requirement to follow appropriate DMV regulations, were not followed in some cases in some of our California claims offices."

"These breaches of our internal policies are unacceptable, and the company has taken decisive action to ensure they do not reoccur. The processing delays that will result from the department's actions will only cause inconvenience to California drivers, and we would have preferred that the department accepted our offer to work through appropriate resolution of these issues before taking recent actions."

Mr. Branch said the company could still obtain DMV driver information by submitting requests on paper, but it cannot obtain home addresses and it will have to reapply for its electronic access privilege "from scratch."

The California Department of Insurance said, without elaboration, that it would be engaging Allstate to hold "discussions regarding DMV's enforcement action against the company."