An entire industry of companies offering to provide
purchasers with the cellular and land line phone
records of third parties has developed, the Federal
Trade Commission told a Senate committee.
The agency is currently investigating companies
that appear to be engaged in telephone "pretexting,"
as the sale of consumer telephone records is called,
according to Lydia Parnes, Director of the FTCs
Bureau of Consumer Protection.
"Companies that engage in pretexting – the
practice of obtaining personal information, such as
telephone records, under false pretenses – not only
violate the law, but they undermine consumers
confidence in the marketplace and in the security of
their sensitive data," Parnes said.
"While pretexting to acquire telephone records
has recently become more prevalent, the practice of
pretexting is not new," she said. "The Commission
has a history of combating pretexting."
The first FTC law enforcement action targeting
operators who used false pretenses to gather
financial information occurred in 1999. The company
offered to provide consumers financial records for
The agency alleged the companys employees
obtained the records from financial institutions by
posing as the consumer whose records it was seeking.
The Commission charged that the practice was unfair
and deceptive and violated the FTC Act.
Following passage of the Gramm Leach Bliley Act (GLBA),
which specifically prohibits pretexting of customer
data from financial institutions, the agency
launched Operation Detect Pretext in 2001.
"Operation Detect Pretext combined a broad
monitoring program, the widespread dissemination of
industry warning notices, consumer education, and
aggressive law enforcement," Parnes said.
It followed up the first phase of Operation
Detect Pretext with a trio of law enforcement
actions against information brokers.
"Because the antipretexting provisions of the
GLBA provide for criminal penalties, the Commission
also may refer pretexters to the U.S. Department of
Justice for criminal prosecution, as appropriate.
One such individual recently pled guilty to one
count of pretexting under the GLBA," she said.
Parnes testified before the Senate Committee on
Commerce, Science, and Transportation Subcommittee
on Consumer Affairs, Product Safety, and Insurance.