Fed bust puts crimp in identity theft data sales

The Federal Trade Commission teamed with the U.S. Postal Inspection Service and the U.S. Attorney for the Southern District of Illinois to quash an illegal operation that sold lists of consumers’ credit card account numbers and security codes, that exposed thousands of consumers to possible identity theft, and violating federal law.The USPIS set up an undercover sting – using postal inspectors who posed as Canadian telemarketers – and sought to buy lists that contained consumers’ credit card account numbers and security codes, and bank account numbers and routing codes, so they could offer credit cards to U.S. consumers for a one-time, up-front fee. It’s a violation of federal law to sell such lists, but Practical Marketing sold them to the undercover inspectors. Practical Marketing pleaded guilty to identity theft and was sentenced to a criminal fine of $10,000, and ordered to make payment of $100,000 to the Postal Inspection Service Fraud Fund to assist the Service in investigating and prosecuting fraud cases. The defendants named in the FTC complaint are Practical Marketing and its principals, Robert and Valerie DeSalvo. They are based in Boca Raton, Florida.In a separate civil action, the FTC charged Practical Marketing and its principals with assisting telemarketers who were purchasing lists in order to solicit U.S. consumers to pay advance fees to get “guaranteed” credit cards with substantial credit limits. Selling lists with unencrypted credit card and bank account information violates the FTC’s Telemarketing Sales Rule. In addition, the TSR bars telemarketers from charging fees in advance to obtain credit cards. The FTC charged that the telemarketers violated the Rule by offering advance-fee credit cards, and the list brokers knowingly assisted the telemarketers in that unlawful conduct.The settlement in the FTC’s action bars the list brokers from “collecting, selling or disclosing” consumers’ account numbers to unaffiliated third parties in the future. The settlement makes the defendants turn over any lists of account numbers to the FTC and destroy any copies. The settlement also requires the defendants to take steps to monitor the activities of their clients. It requires them to evaluate the products and services their clients are offering and the truthfulness of their marketing claims; investigate any complaints they receive about their clients; terminate services to clients who are breaking the law; and report any terminated clients to the FTC, the FTC said in a statement. The order also bars the defendants from providing assistance or support to marketers who are violating the TSR by requiring that the defendants obtain telemarketers’ scripts prior to selling them lists. The settlement contains standard reporting and recordkeeping provisions to allow the FTC to monitor compliance. 

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