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Big Data Firm Helped Fraudsters Pull Off Sweepstakes, Astrology Scams

Epsilon must pay $127.5 million to victims, many older Americans, who lost money

A logo sign outside of a facility occupied by Epsilon in Irving, Texas
Kristoffer Tripplaar / Alamy Stock Photo

Marketing giant Epsilon Data Management has been charged criminally and agreed to pay $150 million for helping facilitate elder fraud schemes involving phony sweepstakes and psychic services, the Department of Justice (DOJ) said Wednesday.

The firm admitted it sold the data of more than 30 million consumers to those behind fraudulent or deceptive schemes from 2008 to 2017, DOJ said. Some of that consumer data came from legitimate clients, including nonprofits and charities, and some came from clients who were fraudsters.

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The schemes involved mass mailings to victims who paid a fee but in return “received nothing of value,” the DOJ said.

Data sales amid arrests and charges

Epsilon employees “continued to sell consumer data to clients engaged in fraud despite knowing that those and similar clients had been arrested, charged with crimes, convicted and otherwise subject to law enforcement actions for false and misleading practices,” DOJ said.

Epsilon, in Irving, Texas, was charged in federal court with conspiracy to commit mail fraud and wire fraud. However, prosecution was deferred under a settlement with DOJ.

Victims with losses to be compensated

Epsilon must designate $127.5 million of $150 million to compensate identified victims with losses caused by fraud schemes that used the consumer data at issue, the department said. A claims administrator will contact identified victims directly, it said. Here's more information about the compensation.

"Firms that amass big data assume a big responsibility to ensure this data is not used by malicious actors.”

—Craig Goldberg, U.S. deputy chief postal inspector

The law enforcement arm of the postal service, the U.S. Postal Inspection Service, probed the case. In a statement, Deputy Chief Postal Inspector Craig Goldberg said: “When data firms such as Epsilon use their extraordinary access to consumers’ personal information to provide laser-focused marketing lists supporting deceptive practices, more American consumers are placed in harm's way. Firms that amass big data assume a big responsibility to ensure this data is not used by malicious actors.”

Consumers can stop sale of their data

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Epsilon is one of the world's largest marketing companies, the DOJ said in its news release. Under the agreement, the firm agreed to take steps to safeguard consumer data and prevent its sale to fraudulent or deceptive marketing campaigns. It also must allow consumers to request that it not sell their information.

Publicis Groupe S.A., which owns the firm, noted Wednesday that it completed its purchase of Epsilon in 2019 after the events described occurred. The previous owner has indemnified Publicis for all costs including the penalties and victim compensation, it said. The previous owner was Alliance Data Systems.

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membership-card-w-shadow-192x134

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Get instant access to members-only products and hundreds of discounts, a free second membership, and a subscription to AARP the Magazine.