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Global marketing company with major Colorado office will pay $150M to settle allegation it sold data to fraudsters

Epsilon Data Management LLC, whose principal sales office is in Westminster, was accused of selling consumer data to fraud operations targeting elders

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One of the world’s largest marketing companies, whose principal sales office is in Westminster, has agreed to pay the federal government $150 million to settle allegations that it sold millions of Americans’ personal information to perpetrators of elder fraud schemes. 

Epsilon Data Management LLC was accused of one criminal count of conspiracy to commit mail and wire fraud for selling lists of customers to multiple mass-mailing fraud schemes. In a deferred prosecution agreement announced Wednesday, the company accepted the fine, $127.5 million of which will go to fraud victims. 

The company, headquartered in Texas, also agreed to put more data protection measures in place and offer a procedure for customers to opt out of future data sharing.

Epsilon specializes in collecting consumer data and using it to help companies target their marketing campaigns.

Federal court documents, signed by the director of the U.S. Department of Justice’s Consumer Protection Branch as well as Jason Dunn, Colorado’s U.S. attorney, describe how Epsilon allegedly sold data from more than 30 million consumers to fraudsters.

The sold data came from the company’s Direct To Consumer Unit, which mailed product solicitations on behalf of client companies, according to federal court documents. 

At least four unnamed employees in the unit — who have all since left the company — knowingly sold consumer data to companies that had been “subject to law enforcement actions for engaging in misleading practices,” court documents state. The Epsilon data was sold between July 2008 and July 2017, according to federal prosecutors.

“The Employees engaged in this conduct, in part, to benefit Epsilon, to enrich themselves through sales-based compensation, and to enable the fraudulent clients to solicit new consumers,” federal court documents said.

Many of the fraudulent schemes included false notices that those receiving the mailers had won a sweepstakes or free astrology reading, either of which would be accessible once the customer paid a fee. 

“Companies who sell consumer information have a responsibility to avoid knowingly selling it to those who will use the data to defraud or swindle consumers,” Dunn said in a written statement. “I hope other data companies will take note of this outcome and ensure that they don’t likewise help fraudsters.”

The case was prosecuted through the U.S. Attorney’s Office in Colorado.

A spokesperson for Publicis, Epsilon’s parent company, said that Epsilon was owned by Alliance Data Systems during the alleged activities. When ADS sold Epsilon in 2019, it agreed to compensate Publicis for all costs associated with the DOJ investigation.

“With this resolution, Epsilon is putting this matter behind it and continuing its focus on its business,” the spokesperson told The Colorado Sun.

Victims of elder fraud can call the National Elder Fraud Hotline at (833)372-8311.

Updated: This story was updated on Jan. 27, 2021 at 4:15 p.m. with a statement from Epsilon.


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