July 13, 2006 1:24 PM PDT

FCC fines alleged phone records scammer

Federal regulators on Thursday voted to impose fines on a Florida company accused of thieving phone call records and selling them on the Web for as little as $100.

At its monthly meeting, the Federal Communications Commission unanimously adopted an order that would force LocateCell to pay $97,500--the highest fee possible for an unregulated company in such a situation--for allegedly failing to provide the agency with all the information it had requested about how the company obtained the data it had sold.

"Responding to commission subpoenas is not optional," said FCC Chairman Kevin Martin. "We expect that subpoenas, as well as all of our requests for information, will be responded to completely and promptly."

He added that he was concerned, however, that LocateCell would view the penalty as "merely the cost of doing business" and hoped for an eventual increase in the statutory maximum level.

The FCC issued subpoenas last November to a number of companies, including LocateCell, that are allegedly engaged in the practice of "pretexting," which means impersonating others--or bribing cell phone and landline providers--to obtain calling information and then selling it online.

The commissioners vowed to continue their investigation into such practices and to move forward with making new rules for wireless companies governing the use of personal customer information.

"Every provider should be on notice that we are watching closely and will take the action necessary to protect consumers' privacy, and we expect them to do the same," Democratic Commissioner Jonathan Adelstein said.

Locatecell.com, whose Web site was defunct during a Thursday visit, is just one of dozens of online services accused of "pretexting." A number of cell phone companies, including T-Mobile and Sprint Nextel, have already filed lawsuits, and in some cases won restraining orders against some of the outfits accused of pretexting.

Last week, Illinois Gov. Rod Blagojevich signed legislation (click for PDF) that would ban phone-record pretexting, making it among the first states in the nation to do so. The issue has also ignited considerable concern in Congress this year.

The House of Representatives in April voted 409-0 to pass a bill called the Telephone Records and Privacy Protection Act of 2006. That measure would impose up to 10 years of prison time--or more, in extraordinary cases--on anyone found guilty of acquiring phone records through fraudulent means; selling, transferring, or attempting to sell or transfer that data without the customer's consent; and purchasing such records while knowing they were obtained illicitly.

The bill still awaits Senate action, although a Senate committee has already approved a similar measure.

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