Epsilon Agrees to Pay $150 Million for Facilitating Fraud

For anyone in the ad industry not yet awake to the importance of data privacy issues, a Department of Justice case has provided a clear wakeup call. Publicis Groupe-owned Epsilon Data Management agreed to a $150 million settlement with the Department of Justice, resolving criminal charges related to the selling of data to perpetrators of elder fraud schemes—stemming from prior to Publicis' acquisition of the company. Epsilon admitted that its DTC unit sold the information of 30 million consumers to the perpetrators of such elder fraud schemes, with $127 million of the settlement total going to compensate victims of elder fraud schemes which utilized information provided by Epsilon. The company entered into a deferred prosecution agreement with the Consumer Protection Branch of the Justice Department’s Civil Division and the U.S. Attorney’s Office for the District of Colorado in relation to charges for one count of conspiracy to commit mail and wire fraud. "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," U.S. Attorney Jason Dunn for the District of Colorado said in a statement published by the Department of Justice. "I hope other data companies will take note of this outcome and ensure that they don’t likewise help fraudsters." Epsilon deferred to Publicis Groupe for comment. "The conduct at issue in the agreement relates to activities that last occurred in 2017, long before Publicis acquired Epsilon," a Publicis spokesperson said in a statement. "Alliance Data Systems, the former owner of Epsilon, has agreed to indemnify Publicis for all costs related to the DOJ investigation and resolution, including the monetary payment." According to the Department of Justice statement, Epsilon admitted that employees in the company's direct-to-consumer (DTC) unit, referred to as employees A-D in court documents, knowingly sold modeled lists of consumers to clients which were engaged in fraud from July 2008 through July 2017. Publicis Groupe acquired Epsilon for an estimated $4.4 billion in 2019. Epsilon acknowledged in the settlement that employees in the unit sent such information to multiple mass-mailing fraud schemes, which led to fraudulent "astrology" and "sweepstakes" solicitations to consumers, stating such consumers were recipients of a large prize or personalized psychic services which they could obtain for a fee. According to the Department of Justice, employees of Epsilon's DTC unit continued selling such information to perpetrators of such schemes while aware that such offers were in fact scams, which disproportionately impacted elderly or otherwise vulnerable individuals. The consumer data sold by Epsilon's DTC unit came from other fraudulent clients as well as legitimate Epsilon clients, including charitable and non-profit organizations, according to the DOJ. Epsilon employees continued selling such consumer data to clients engaged in fraud even after those buyers, and similar clients, had been charged and/or convicted for false or misleading practices. A Department of Justice attorney commended Epsilon for its cooperation since the misconduct was revealed as well as its commitment to remediation and compliance measures. "By allowing clients engaged in fraudulent schemes to buy data on millions of consumers most susceptible to their schemes, Epsilon employees facilitated those schemes with staggering effect," Acting Assistant Attorney General Brian Boynton of the Department of Justice's Civil Division said in a statement. "We are encouraged by Epsilon’s cooperation since the misconduct was discovered, its remediation efforts, and its commitment to stringent new compliance measures."

The Future of Identity

Epsilon Agrees to Pay $150 Million for Selling Info Facilitating Elder Fraud

The now Publicis-owned company's settlement with the DOJ comes after a decade of solicitations

Erik Oster

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Erik Oster