FTC ADVISES INFORMATION BROKERS TO JUST BE THEMSELVES

As reported by Brian Krebs, Newsbytes, data mining firms that obtain consumers' financial and bank account information under false pretenses may soon find themselves the target of civil and criminal investigations, federal regulators said.

In letter to more than 200 Web sites offering financial search services, the Federal Trade Commission (FTC) warned against "pretexting," the practice of using forged documents or making phony phone calls in order to obtain sensitive consumer information from a financial institution or directly from the consumer.

The FTC said an examination of more than 1,000 Web sites and some 500 print advertisements turned up roughly 200 firms that offered to obtain and sell asset or bank account information about consumers to third parties.

The commission warned that it would continue to monitor the data firms and their advertisements for signs of pretexting, which is prohibited under the Gramm-Leach-Bliley Act of 1999. Violators of could be fined up to $11,000 for each violation, as well as criminal penalties, the FTC said.

Last year, one of the GLB Act's key authors, former House Banking Committee Chairman James A. Leach, R-Iowa, enlisted the help of committee staff to conduct a similar study of financial data mining firms advertising their services in the back of several different legal trade journals. In that survey, all of the companies contacted confirmed their ability and willingness to collect a broad range of financial information on a particular individual for the right price, a finding that led Leach to declare that the privacy protections in GLB Act had done little to discourage would-be information brokers.

For its part, the FTC agreed, and has kept an eye on such operations because they are thought to be one of the key sources of information for perpetrators of identity theft, a crime that affects an estimated 500,000 Americans each year.

For more information on the FTC's "Pretext" search, check out: www.ftc.gov/opa/2001/01/pretexting.htm.