The staff of the Federal Trade Commission's Division of Financial Practices announced today the beginning of "Operation Detect Pretext," an effort to protect consumers from firms that obtain their customer information under false pretenses - a practice known as "pretexting." As part of the operation, FTC staff conducted a "surf" of more than 1,000 Web sites and a review of more than 500 advertisements in the print media for firms that offered to conduct financial searches. FTC staff identified approximately 200 firms that offered to obtain and sell asset or bank account information about consumers to third parties. The Gramm-Leach-Bliley Act ("GLB") prohibits individuals from obtaining a customer's information from a financial institution or directly from the customer using false representations, fictitious documents or forgery.
On Friday, January 26, 2001, FTC staff sent notices to approximately 200 firms by e-mail or facsimile advising them that their practices must comply not only with GLB, but with other applicable federal laws, including the Fair Credit Reporting Act. The notice advised the firms that the FTC would continue to monitor Web sites and print media advertisements offering financial searches, and asked them to take steps to ensure that they complied with GLB and all other applicable federal laws.
The notice stated that:
Section 521 of GLB specifically prohibits the following practices when used to obtain customer information from a financial institution:
- Making or attempting to make a false representation or statement to an officer or employee of a financial institution;
- Making or attempting to make a false representation or statement to a customer of a financial institution; and
- Providing, or attempting to provide, a forged or fictitious document to an officer or employee of a financial institution.
For example, it is a violation of GLB to pose as a customer of a financial institution to obtain personal financial information, to deceive the customer into providing personal financial information to you or to provide a financial institution with a document known to be fictitious for the purpose of obtaining customer financial information. Violations of Section 521 of GLB may result in civil penalties of up to $11,000 for each violation, as well as criminal penalties.
In addition to the notice, as part of "Operation Detect Pretext," the FTC recently published a Consumer Alert entitled "Pretexting: Your Personal Information Revealed" that offers practical tips on how consumers can protect their personal information.
"Pretexting: Your Personal Information Revealed," produced by the FTC's Office of Consumer and Business Education, and additional information about pretexting is available free from the Commission's Consumer Response Center (1-877-FTC-HELP (1-877-382-4357) and online at http://www.ftc.gov/ftc/consumer.htm The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint, or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form. The FTC enters Internet, telemarketing and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies worldwide.
FTC Office of Public Affairs
Bradley H. Blower,
Bureau of Consumer Protection