Company Settles Pretexting Case with the FTC

The CEO Group is fined for illegally obtaining and selling telephone records.

A Web-based operation that sold telephone records without consumer consent settled Federal Trade Commission charges Dec. 17 that it violated federal laws.

The settlement bans the CEO Group—doing business as Check Em Out—from marketing or selling telephone records.

The settlement imposed a total judgment of $222,381, but due to the company's inability to pay, all but $25,000 of the judgment is suspended.

The FTC charged the CEO Group with obtaining the telephone records through an illegal ruse known as pretexting, which involves using false pretenses to get the records from phone companies. The Telecommunications Act of 1996 provides that phone records may only be disclosed "upon affirmative written request by the customer."

Hewlett-Packard found itself embroiled in a pretexting scandal in 2006 when it was revealed that investigators hired by HP used pretexting to obtain the telephone records of board members and journalists as part of an effort to investigate leaks about the company.

In May 2006, the FTC filed federal court complaints charging five Internet operations that obtained and sold consumers' confidential telephone records to third parties, including the CEO Group. The FTC previously obtained settlements in two of the cases and a default judgment in a third case. One case remains in litigation.

The case was filed in the U.S. District Court for the Southern District of Florida.

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