Telephone Records Seller Settles FTC Charges

Parties who obtained and sold consumers’ telephone records, including information on calls placed and received, without the consumers’ knowledge or consent, have agreed to settle Federal Trade Commission charges that their practices violated federal law. The settlement bars the defendants from marketing or selling consumers’ phone records and requires them to give up their ill-gotten gains.

In May 2006, the FTC filed federal court complaints charging five Web-based operations that obtained and sold consumers’ confidential telephone records to third parties with violating federal law. The Telecommunications Act of 1996 provides that customers’ phone records may only be disclosed “upon affirmative written request by the customer.” The agency alleged that the principals of the Web sites were pretexting – obtaining records using false pretenses or hiring others to do so – in order to get the records from phone companies. The agency alleged that obtaining and selling the records without consumers’ knowledge or consent constitutes an unfair practice, and asked the courts to order a permanent halt to the sale of the phone records.

The agency also asked the court to order the defendants to give up the money they made through their illegal operations. The settlement announced with CEO Group, Inc., doing business as Check Em Out, and its principal, Scott Joseph, ends the litigation against them in that case. The FTC previously obtained settlements in two of the cases and a default judgment in a third case, and one case remains in litigation.

The settlement bars the defendants from obtaining, causing others to obtain, marketing or selling consumer phone records or other consumer personal information except where allowed by law, regulation, or court order. The settlement imposes a judgment of $222,381, the amount earned through the sale of consumers’ telephone records. All but $25,000 of the judgment is suspended based on the defendants’ inability to pay. Should the court find that they misrepresented their finances, the entire $222,381 will be due. The settlement also imposes
bookkeeping and record keeping provisions to allow the FTC to monitor compliance with its order.

The Commission vote to accept the settlement was 5-0. It was filed in the U.S. District Court for the Southern District of Florida, and entered by the court on November 5.

NOTE: This stipulated final order is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Consent orders have the force of law when signed by the judge.

The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, click http://www.ftc.gov/ftc/complaint.shtm or call 1-877-382-4357. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,600 civil and criminal law enforcement agencies in the U.S. and abroad. For free information on a variety of consumer topics, click http://www.ftc.gov/bcp/consumer.shtm.