Data brokers accused of using deception to obtain financial information from consumers have settled charges with the Federal Trade Commission by returning money made in the alleged scheme.
The FTC filed lawsuits in three federal courts against the three companies — Information Search, Baltimore; Smart Data Systems, Staten Island, NY; and Discreet Data Systems, Humble, TX — along with their operators, in April. The lawsuits accused the companies of using false pretenses and impersonation to obtain confidential consumer information, such as bank balances, and sell it.
Such information-gathering schemes are known as pretexting. This activity is outlawed under the federal Gramm-Leach-Bliley Act, the FTC said.
According to the FTC, the three companies operated Web sites on which they claimed they could provide confidential information about consumers, including checking and saving account information, investment account information and safe-deposit box locations. The companies charged fees of $100 to $600, the FTC said.
FTC investigators set up a sting operation in which an investigator, posing as a consumer seeking information on her fiancé, asked the companies to check the balance of a dummy bank account. The companies later provided information about the account, the FTC said.
The operators of Discreet Data Systems and Smart Data Systems paid $2,000 each to settle the case on Friday, while the operator of Information Search received a suspended fine of $15,000. All three companies agreed to reform their information-gathering practices.