The HP pretexting ghost hovers over FTC’s latest settlement

The Federal Trade Commission today halted its 16th pretexting scheme since 2006, this time bringing to an end the operations of a company that sold consumers’ confidential phone records and was linked to the HP pretexting scandal in 2006.

The FTC charged that since at least 2005 Action Research Group and its principals, Joseph and Matthew DePantes, sold confidential customer phone records, including lists of calls made and the dates, times, and duration of the calls, to third parties, without the knowledge or consent of the customers. To get the records, these defendants relied upon the other defendants, Eye in the Sky Investigations, Cassandra Selvage and Bryan Wagner, who obtained them from phone companies through “pretexting” – using “false pretenses, fraudulent statements, fraudulent or stolen documents or other misrepresentations, including posing as an account holder or as an employee” of a phone company. Selling the records constitutes an invasion of privacy that could endanger the health and safety of consumers, the agency alleged.

The $600,000 settlement and default judgments permanently bar the defendants from obtaining, marketing or selling customer phone records or consumers’ personal information derived from those records. They also bar the defendants from pretexting or using others to pretext to obtain consumers’ information.

The settlement order entered a judgment in the amount of $67,000 against the DePantes and ARG, the estimated amount of ill-gotten gains the defendants earned from their illegal scheme; the judgment was suspended upon a payment of $3,000 based on the defendants’ inability to pay. In the default judgments, the court ordered Wagner to give up $428,085 in ill-gotten gains and ESI and Selvage to give up $110,762.

You may recall that Action Research was part of the HP pretexting mess in 2006 where the company had hired investigators to try to find the source of internal company leaks to the press. The investigators, however, were found to have used fraudulent methods to obtain the reporters' phone records. A variety of state and federal laws have since banned pretexting as an information gathering tool.

HP settled cases with The New York Times Company and three BusinessWeek journalists in February  though the parties did not disclose the size of the settlements. HP has already paid $4.5 million in a civil-case settlement with the State of California related to the incident.  

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