SECOND ANNUAL REPORT TO CONGRESS ("Fraudulent Access to Financial Information") This report is submitted in accordance with the reporting provision of Section 526(b) of the Gramm-Leach-Bliley Act, 15 U.S.C. § 6826(b) (1999). Section 526(b) requires that the Federal Trade Commission and the Attorney General(1) submit to Congress an annual report on the number and disposition of all enforcement actions taken pursuant to Title V, Subtitle B ("Fraudulent Access to Financial Information") of that Act. Enforcement Actions Taken by the Federal Trade Commission In April 2001, the Federal Trade Commission filed law enforcement actions in three federal district courts against information brokers for, inter alia, violations of 15 U.S.C. § 6821. The complaints alleged that the defendants engaged in (or solicited others to engage in) "pretexting" - obtaining a consumer's financial information from financial institutions under false pretenses. The Commission sought, and was granted, a temporary restraining order in each of the cases. Additionally, the Commission staff negotiated a stipulated preliminary injunction in each case, and subsequently obtained stipulated final orders, halting the defendants' alleged violations. See FTC v. Information Search, Inc. and David Kacala, No. AMD-01-1121 (D. Md. preliminary injunction entered May 4, 2001; final order entered March 15, 2002); FTC v. Victor L. Guzzetta d/b/a Smart Data Systems, No. CV-01-2335 (E.D.N.Y. preliminary injunction entered Apr. 19, 2001; final order entered Feb. 25, 2002); FTC v. Paula L. Garrett d/b/a Discreet Data Systems, No. H 01-1225 (S.D. Tex. preliminary injunction entered Apr. 19, 2001; final order entered March 25, 2002). In the final settlement of each case, the Commission also obtained a provision requiring disgorgement of ill-gotten gains, based on the proportion of the defendant's business that was attributable to financial asset searches. In FTC v. Victor L. Guzzetta d/b/a Smart Data Systems and FTC v. Paula L. Garrett d/b/a Discreet Data Systems, each defendant paid $2,000 into the United States Treasury. In FTC v. Information Search, Inc. and David Kacala, a judgment for $15,000 was entered, the payment of which is suspended, with a right to reopen, based on the defendant's financial and health conditions. These matters represent the first three law enforcement cases under Operation Detect Pretext, the Commission's effort to combat pretexting. The Commission's law enforcement efforts are ongoing, including consumer and industry education.
The Honorable Paul S. Sarbanes Dear Mr. Chairman: Enclosed is the annual report required to be submitted to Congress, pursuant to Section 526(b) of the Gramm-Leach-Bliley Act, 15 U.S.C. § 6826(b). By direction of the Commission. Timothy J. Muris
The Honorable Michael G. Oxley Dear Mr. Chairman: Enclosed is the annual report required to be submitted to Congress, pursuant to Section 526(b) of the Gramm-Leach-Bliley Act, 15 U.S.C. § 6826(b). By direction of the Commission. Timothy J. Muris 1. The Department of Justice is submitting its report separately. |
