Financial-Data Collection Firm to Fight FTC Claim
Colorado information broker James Rapp, the owner of Touch Tone Information Inc., Denver, will contest Federal Trade Commission allegations that he and his firm illegally traffic in personal financial data.
The resulting court action could, for the first time, reveal just how authorities, lawyers and banks obtain information to track down debtors without court orders as required by a variety of personal privacy laws.
Rapp’s lawyer, James Butera, also a lobbyist for the Coalition to Amend the Financial Information Privacy Act, said Rapp definitely would be “contesting the FTC’s allegations” when a trial date is set.
The FTC alleges that Rapp’s firm violated federal laws against unfair and deceptive practices through the use of “pretext calling” to gather personal financial information, which it’s been selling since at least January 1997.
Pretext callers, according to the FTC, try to trick bank clerks and others into revealing a variety of information, ranging from bank balances and telephone records to stockholdings and other financial data.
FTC Chairman Robert Pitofsky, who called the practice “a particularly pernicious invasion of consumer privacy,” said, “this case should send a strong message to information brokers that the FTC will pursue firms that use false pretenses to profit at the expense of consumers’ privacy.”
Jonathan A. Smollen of the FTC’s Bureau of Consumer Protection, would not comment on the lawsuit, which the agency filed in U.S. District Court, Denver, April 21.
A statement on the Web site of the Coalition to Amend the Financial Information Privacy Act (http://www.cafpa.org) described the FTC’s action as an “ongoing witch-hunt against a portion of the information industry.” It added that Touch Tone is representative of the “hundreds of businesses that perform vital asset location functions.”
The group also advised its members “to proceed with caution as to continued asset location activities.”
Rapp was not initially going to challenge the FTC’s allegations, but reportedly changed his mind after clients and other information brokers expressed fears that his decision could lead to legal precedents that would end their existing information-gathering practices.
