FTC Settles With Alleged List Broker

An alleged list broker, formerly based in Arizona, and the two companies he ran have agreed to a proposed court order barring them from violating the agency’s Telemarketing Sales Rule (TSR) and fined $120,000, according to the Federal Trade Commission.

Named as defendants were Glenn L. Patten, and through two companies in which he was the principal and only officer, according to the FTC.
The order also bars the defendants from collecting, selling, renting, or disclosing consumers’ account numbers, with certain limited exceptions, according to the FTC.

The order further requires Patten to provide the FTC with any lists of account numbers and destroy all other copies. The goal of these provisions is not to bar Patten from selling customer lists, but from selling consumers’ non-public information. It applies to all information used in telemarketing, as well as other types of marketing, such as direct mail or e-mail spamming, continued the Commission.

The proposed order settles a complaint charging that the defendants assisted and facilitated telemarketers of fraudulent “advance-fee” credit cards by providing them with unencrypted consumer information, according to the Commission.

The complaint alleged the defendants sold “full data leads” to these telemarketers that included consumers’ bank account and routing information, credit card numbers, credit card security codes, and credit card expiration dates, without first obtaining authorization from consumers to do so, all the while knowing that the data would be used in alleged schemes designed to mislead and defraud consumers, according to the FTC.

According to the Commission, the defendants violated the TSR while working as a list broker between 2002 and 2007. Operating his businesses from an apartment in Chandler, AZ, the FTC contends that Patten sold full data leads to a variety of sources, including telemarketers – many of whom were involved in trying to sell advance-fee credit cards to consumers.

The Commission’s complaint charges Patten with assisting and facilitating telemarketers who falsely represented to consumers that after paying an advance-fee consumers were guaranteed to receive a credit card, while knowing, or consciously avoiding knowing, that the telemarketers were engaged in conduct that was in violation of the TSR. In addition, the complaint charges Patten with assisting and facilitating the actions of telemarketers by providing them with unencrypted consumer account information in the full data leads he sold them. The TSR specifically prohibits providing telemarketers with such unencrypted information.

This case is on file in the U.S. District Court for the Northern District of Illinois in Chicago.