March 8, 2002
Information brokers who allegedly used deception to obtain consumers' confidential financial information have agreed to settle Federal Trade Commission charges that their practices violated federal law. The settlements bar the operators from obtaining or hiring others to obtain consumers' financial information through illegal means or by hiring or contracting with others who use illegal methods to obtain consumers' financial information. The settlements also require that the defendants give up the money they made in the illegal scheme.
In April 2001, the FTC filed suit in three U. S. District Courts to halt the operations of information brokers who allegedly used false pretenses, fraudulent statements, or impersonation to illegally obtain consumers' confidential financial information - such as bank balances - and sell it. The practice of obtaining consumers' private financial information under false pretenses is known as "pretexting." The Gramm-Leach-Bliley Act specifically outlaws pretexting and soliciting others to pretext.
"Pretexting, like that alleged in these cases, undermines consumers' basic expectation of confidentiality in their financial information," said J. Howard Beales, III, Director of the FTC's Bureau of Consumer Protection. "The clients of pretexters are often law firms and other businesses. These buyers should beware because knowingly obtaining pretexted information is illegal as well."
In documents filed with the courts, the FTC charged that the defendants maintained Web sites where they advertised that they could obtain non-public, confidential, financial information -- including such things as checking and savings account numbers and balances, stock, bond and mutual fund accounts and safe deposit box locations -- for fees ranging from $100 to $600, depending on the information sought. In sting operations set up by the FTC in cooperation with local banks, investigators established dummy bank accounts in the names of cooperating witnesses and then called defendants posing as purchasers of the defendants' pretexting services. In the three cases, an FTC investigator posed as a consumer seeking account balance information on her fiancé's checking account. The investigator provided limited information about her "fiancé's" account to the defendants. The defendants or persons they hired called the bank, identifying themselves by the name of the supposed "fiancé," and asked to check his balance. The defendants later provided the account balance information to the FTC investigator. The FTC asked the courts to halt the illegal practices permanently, freeze the defendants' assets pending trial, and order them to give up their ill-gotten gains. The courts temporarily enjoined the defendants from continuing the illegal practices and imposed partial freezes of their assets pending trial. The settlements announced today resolve those court cases.