Pretexting - What You Don't Know Can Hurt You

Someone calls you telling you they are conducting a survey for a product you use regularly. After a few innocuous questions, they start asking about your social security number or banking information. They may even state that you are eligible for a prize or drawing, but require your credit card information for eligibility reasons. Is this normal? Is it legal?

Collecting information for one reason under the pretext of another is illegal. While pretexting has always been an invasion of privacy (see the Restatement 2d of Torts § 652C) The Gramm-Leach-Bliley Act makes it illegal for anyone to:

1) use false, fictitious or fraudulent statements or documents to get customer information from a financial institution or directly from a customer of a financial institution;
2) use forged, counterfeit, lost, or stolen documents to get customer information from a financial institution or directly from a customer of a financial institution; or
3) ask another person to get someone else’s customer information using false, fictitious or fraudulent statements or using false, fictitious or fraudulent documents or forged, counterfeit, lost, or stolen documents.

Note that you can be liable for a pretexting violation even if you are not collecting the information yourself. If you purchase customer information from a pretexter, you are in violation of the law as well. Under the Federal Trade Commission Act (FTCA) 15 U.S.C. § 45, the Federal Trade Commission also has the authority to intervene and stop any deceptive act or practice affecting commerce.

Unscrupulous companies use information obtained through pretexting to commit identity theft. The most common forms of identify theft include: credit card fraud, communications services fraud, bank fraud and loan fraud. The best defense against pretexting is to make everyone in your company aware of the threat. Do not give out confidential information to people who contact you; any legitimate entity would already have the information they are requesting. Review all of your statements promptly and contact your providers immediately if you identify any irregularities. Dispose of all confidential information properly. A paper shedder is often your best defense against identity theft.

Most importantly, if you purchase consumer information from third parties, make sure you are not purchasing from a pretexter. Which pretexters are often very stealthy about their activities and take extreme measures to avoid getting caught by the authorities, they are often not nearly as cautious when it comes to protecting those who purchase information from them.

Brett Trout

pretexting FTC identity theft Gramm Leach Bliley

Microsoft Pay-for-Post

The Federal Trade Commission has issued a staff opinion stating that word of mouth marketing, like blogs, are deceptive if potential consumers are more likely to trust the endorser of a product or service based on an assumption that the endorser is independent from the marketer. This opinion hits secretly-sponsored blogs right between the eyes. If a company is sponsoring you to speak highly of them, you better make your audience aware of the sponsorship. That warning also extends to marketing firms seeking to influence bloggers on behalf of their clients

I write about issues that affect my readers. People read my words. People like my words. It is all about the words. If my words told you that I was the best patent lawyer in the world, or that I offered special holiday discounts on my services, or that I offer a money-back guarantee (none of which are true), what would you think of my words? You would question their integrity and probably not read them anymore.

Blogs which merely push a product or service never gain long term traction. Great blogs offer insight, information and entertainment. Readers know great blogs. Great bloggers are: transparent; responsive to their readership; and personal. These traits engender trust and, at times, personal and professional relationships follow.

People trust blogs; they do not trust marketers. Marketers know that the secret of success on the blogosphere is sincerity. Once you can fake that, you have it made . . . or so they thought. The blogosphere police are powerful. Blog readers are comprehensive. Large companies like Wal-Mart and Sony learned to their chagrin that a forceful “outing” of your secretly sponsored blog is unpleasant. Such outings destroy years of hard-earned brand value. Such lost value dwarfs any slight benefit a fake blog could hope to garner.

If marketers cannot write their own fake blogs, what can they do? The next obvious step is to sway existing blogs with a solid readership and a reputation for integrity. As I have written about the current Iowa Microsoft antitrust case, I have received an increasing flow of information. Some pro-Microsoft, some anti-Microsoft. What I noticed was an insidious flow of pro-Microsoft propaganda not identified as being sponsored by Microsoft. Although the information started off neutral, the tone changed toward an obvious bias. That led me to check out the sender. Once I identified that the information was sponsored by Microsoft, that knowledge irreparable impaired the credibility of the information and the sender. I erred in my initial failure to make the connection, but as noted in the FTC opinion, I trusted the endorser more because I assumed the endorser was independent of Microsoft.

Tiny companies with tiny problems may get away with planting blog posts no one will ever read. For big dogs, like Microsoft, attempts to surreptitiously manipulate the blogosphere on larger issues will inevitably back-fire. Keep that play for the mainstream media.

I like Microsoft. I use their products at home and at the office. This blog would be less of a blog without Microsoft clip art. While I do not like some things about their products, they are better than anything else I have found. I am a customer by virtue of the strength of their products; I just hope they do not lose me through the furtive nature of their marketing.

Brett Trout

Microsoft, Iowa, FTC, antitrust, pay for post