NCPA - National Center for Policy Analysis

"Information Brokers" Assail Financial Privacy

June 23, 1999

Federal lawmakers and state officials are examining the operations of "information brokers" -- those who obtain and sell private financial information on a targeted individual. The information includes bank account numbers and balances, safety deposit box locations, telephone records, and cellular phone and pager records -- information which police need warrants to obtain.

For a fee of about $1,000, an information broker will work the phones, surf the Internet and use deceptions ranging from outright lies to subtle misdirections to obtain private information on an individual.

  • Those who practice what is also known as "pretexting" -- using a pretext to unlock those financial secrets -- claim their activities have blossomed into a $250 million a year industry.
  • Rep. Jim Leach (R-Iowa) is sponsoring the Financial Information and Privacy Act, which would make it a federal offense to obtain customer information from a financial institution by fraud -- such as deceiving employees into releasing it -- and would make it illegal to receive information obtained by fraud.
  • The Federal Trade Commission has filed a lawsuit against Touch Tone Information of Aurora, Colo., which may determine regulatory authority over information brokers.
  • Minnesota Attorney General Mike Hatch has filed suit against U.S. Bank, charging it with getting $4 million in commissions in return for giving telemarketers copious amounts of customers' personal information -- from names and addresses to average account balances and credit card numbers.

Those who engage in pretexting have formed their own lobbying organization, the Coalition to Amend the Financial Information Privacy Act. Its purpose is to argue that pretexting has an appropriate use. One of its founders claims that when used appropriately the practice is "consistent with the moral standards of society."

Source: M.J. Zuckerman, "E-Sleuths Have Federal Regulators on their Tails," USA Today, June 23, 1999.


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