FCC Plans $10M Fine For Carriers That Breached Consumer Privacy
NEWS
Federal Communications Commission
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Internet: http://www.fcc.gov
Washington, D.C. 20554
This is an unofficial announcement of Commission action. Release of the full text of a Commission order constitutes official action.
See MCI v. FCC. 515 F 2d 385 (D.C. Cir. 1974).
FOR IMMEDIATE RELEASE:
NEWS MEDIA CONTACT:
October 24, 2014
Neil Grace, 202-418-0506
E-mail: neil.grace@fcc.gov
FCC PLANS $10 MILLION FINE FOR CARRIERS THAT BREACHED CONSUMER PRIVACY
TerraCom and YourTel Allegedly Stored Customers’ Personal Information Online
in a Format Accessible Through Routine Internet Search
Washington, D.C. – The FCC intends to fine TerraCom, Inc. and YourTel America, Inc. $10 million for
several violations of laws protecting the privacy of phone customers’ personal information. According to an
investigation by the Enforcement Bureau, TerraCom and YourTel apparently stored Social Security numbers,
names, addresses, driver’s licenses, and other sensitive information belonging to their customers on
unprotected Internet servers that anyone in the world could access. The information was gathered to
demonstrate eligibility for the Lifeline program, which is a Universal Service Fund program that provides
discounted phone services for low-income consumers. The companies allegedly breached the personal data of
up to 305,000 consumers through their lax data security practices and exposed those consumers to identity
theft and fraud. This is the Commission’s first data security case and the largest privacy action in the
Commission’s history.
“Consumers trust that when phone companies ask for their Social Security number, driver’s license, and other
personal information, these companies will not put that information on the Internet or otherwise expose it to
the world,” said Travis LeBlanc, Chief of the FCC’s Enforcement Bureau. “When carriers break that trust,
the Commission will take action to ensure that they are held accountable for unjust and unreasonable data
security practices.”
In their privacy policies, the two companies stated that they had in place “technology and security features to
safeguard the privacy of your customer specific information from unauthorized access or improper use.” Yet,
from September 2012 through April 2013, the sensitive documents they collected from consumers were
apparently stored in a format accessible via the Internet and readable by anyone. Ultimately, the personal
information of up to 305,000 low-income consumers was apparently exposed to public view. Yet even after
the companies learned of this security breach, they allegedly failed to notify all potentially affected
consumers, depriving them of any opportunity to take steps to protect their personal information from misuse
by Internet thieves.
The Commission alleges that the carriers’ failure to reasonably secure their customers’ personal information
violates the companies’ statutory duty under the Communications Act to protect that information, and also
constitutes an unjust and unreasonable practice in violation of the Act, given that their data security practices
lacked “even the most basic and readily available technologies and security features and thus creates an
unreasonable risk of unauthorized access.”
The Commission further alleges that the companies’ deceptive and misleading representations of customer
privacy protections, and their subsequent failure to notify their customers of the security breach, constitute
unjust and unreasonable practices as well.
Accordingly, the Commission plans to fine TerraCom and
YourTel $10 million.
This is the second major enforcement action the Commission has taken to protect consumer privacy in the last
two months. In September, the Commission’s Enforcement Bureau reached a $7.4 million settlement with
Verizon to address the company’s unlawful marketing to two million customers without their consent or
notification of their privacy rights.
More information about the Verizon settlement is here:
http://www.fcc.gov/document/verizon-pay-74m-settle-privacy-investigation
The Notice of Apparent Liability will be released at a later time and available on the FCC website.
Action by the Commission October 24, 2014, by Notice of Apparent Liability (FCC 14-
173). Chairman Wheeler, Commissioners Clyburn and Rosenworcel, with Commissioners Pai and
O’Rielly dissenting.
Chairman Wheeler, Commissioners Clyburn, Pai and O’Rielly issuing separate
statements.
-FCC-
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