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California, New York Fight Privacy Battles
by Michael Martinez
California Attorney General Bill Lockyer on Tuesday sued a Florida-based company for allegedly obtaining consumer telephone records by fraud and selling them over the Internet.
The lawsuit alleges that Data Trace USA engaged in "pretexting," the illegal practice of impersonating customers or their agents to obtain their personal information. According to prosecutors, Data Trace made the phone records it obtained available on its site.
Investigators from Lockyer's office claim to have obtained the detailed call records of a deputy attorney general for $220. The complaint alleges that Data Trace obtained the information by posing as the prosecutor and accessing the Verizon Wireless Web site.
"Data Trace has used fraudulent means to commit outrageous invasions of privacy against California cell-phone users," Lockyer said in a statement. "Unfortunately, this company is not alone. These shady operators are increasing in number. Californians' privacy is not for sale."
Lockyer is seeking compensation for customers who suffered financial harm and at least $10 million in civil penalties. Missouri Attorney General Jay Nixon filed a similar suit last week.
In separate news, an e-mail marketer has agreed to pay New York $1.1 million to settle a suit alleging that the company improperly disclosed the personal information of more than 6 million consumers. New York Attorney General Eliot Spitzer on Sunday announced that Daltran Media agreed to settle what he called one of the largest deliberate data breaches in American history.
According to Spitzer, Daltran abused information it obtained from companies that compile information on consumers. Investigators said Graitis Internet, a company that collected user information on Web sites such as freeipods.com and freedvds.com, sold more than 7 million files that later were abused by Daltran. Graitis baited consumers into providing their personal information by offering free goods such as digital music players, prosecutors said.
"With this case, we hope to set a new standard for Internet marketers and consumer research companies," Spitzer said in a release. "Personal information secured through a promise of confidentiality must always remain confidential."
In addition to the $1.1 million it must pay to settle the case, Daltran has been ordered by Spitzer's office to immediately destroy the information it obtained from Graitis and other similar operations. The company also must appoint a chief privacy office to ensure that it complies fully with Justice Department requests.
"Companies must adhere to known privacy policies and promises," Spitzer said. "Failing to do so constitutes a clear consumer fraud."
Gov. Rounds Vetoes Sales-Tax Bill
South Dakota Gov. Mike Rounds on Monday vetoed a bill to provide the state's retailers with relief for expenses they incur collecting local taxes.
The measure, H.B. 1110, would allow businesses to keep 1.5 percent of the taxes they collect to offset expenses. It also calls for a special fund to be established to hold sales taxes collected by online and mail-order merchants. Current laws do not require remote retailers to pay sales taxes in South Dakota.
In a letter to the legislature, Rounds said the state would lose at least $3.3 million in tax revenues if the measure is enacted, and cities and towns would lose about $1.5 million. He said the state would be better served by directing the money retailers would save under the bill to its school system or other more far-reaching programs.
"A $4.8 million reduction in state and local taxes should not forwardly be mandated by this legislature," Rounds said. "Future legislatures should have the option to make those determinations when additional ongoing revenues are available."
New Jersey Advances Online Bullying Bill
New Jersey lawmakers on Monday approved a proposal to extend the state's anti-bullying law to include certain forms of electronic communication.
The state Senate voted unanimously to amend a 2002 law that requires public schools to adopt policies outlawing harassment, intimidation and bullying. New Jersey's current statute only addresses written, verbal or physical gestures.
Under the new measure, S. 993, the definition of bullying would be expanded to cover technologies like e-mail and text messaging. The bill also would prohibit bullying in Internet chat rooms and on online message boards.
A separate House measure, A. 1327, would require the operators of Web logs and other online forums to gather the legal names and addresses of people who comment on the sites, effectively outlawing anonymous electronic communication. The Office of Legislative Services is currently reviewing the measure to determine its constitutionality.
No hearings on the proposal have been scheduled. The bill's sponsor, Republican Assemblyman Peter Biondi, said he would withdraw it if legal counsel finds it does not withstand legal scrutiny.
Georgia Bill Targets Broadband Authority
Georgia lawmakers on Wednesday moved to the governor a measure that would strip state regulators of their authority over the high-speed Internet.
The House voted 157-4 to pass a bill that would prevent the Georgia Public Utility Commission from regulating broadband, wireless and Internet telephone services. The Senate previously passed the bill, S.B. 120, which now only needs gubernatorial authorization to become law.
According to the bill, it is in the public interest to remove any power of the state regulatory commission to set rates and terms for the offering of high-speed services in Georgia. "Market-based competition is the best mechanism for the selection and setting of such rates, terms and conditions," the bill said.
California May Review AOL E-Mail Plan
California Sen. Dean Florez on Tuesday called for a government investigation into an America Online proposal to establish a fee-based e-mail service.
At a press conference, Florez said the Senate E-Commerce, Wireless Technology and Consumer Driven Programming Committee would hold a hearing on the matter in April.
AOL last month announced plans to offer a tiered system for bulk e-mail senders. The proposal has drawn heat from multiple organizations. Technology Daily reported earlier this week that a coalition of hundreds of various groups claims to have gathered more than 350,000 signatures for petitions against the plan.
"It seems to me that AOL is setting a horrible precedent here," Florez said in a release. "The whole ideal of net neutrality gets wiped away, and we are left with an Internet of haves and haves-not."
Florez also said he planned to ask the committee to consider comprehensive legislation to regulate the Internet.
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