Assigned to CED                                                                                                         AS PASSED BY THE SENATE

ARIZONA STATE SENATE

Forty-seventh Legislature, Second Regular Session

AMENDED

FACT SHEET FOR H.B. 2785

telephone records; unauthorized sale prohibited

Purpose

            Prohibits the procurement and sale of telephone records through unauthorized, fraudulent or deceptive means.

Background

            According to the Federal Communications Commission (FCC), local, long distance and wireless telephone companies collect customer information, including the numbers called, the time of the calls and particular services used.  This information is called Customer Proprietary Network Information (CPNI) and is used to provide requested services and billing information. Telephone companies can disclose CPNI only in these three instances: as required by law, with the customer’s approval and in providing the service from which the customer’s information is derived. In January 2006, the FCC launched an investigation regarding customer protection, privacy and the unauthorized procurement and sale of phone records. The FCC is currently investigating numerous companies for allegedly illegally procuring phone records.

            According to the Electronic Privacy Information Center (EPIC), a public interest research center, there are over 40 “data broker” companies that obtain and sell personal wireless and wire line telephone records. EPIC asserts that data brokers have fraudulently gained access to telephone records by posing as the customer, then offering the records for sale on the Internet without the customer’s consent or knowledge, a practice known as “pretexting.”

            Telephone service providers, including T-Mobile, Sprint and Cingular, have taken legal action against data broker companies. California, Texas, Washington and Florida have also filed suit against data broker companies. Several bills have been introduced in Congress that would prohibit the sale, procurement and transfer of phone records obtained fraudulently and increase customer protection. Colorado, California, Washington and Illinois are among the states considering legislation that would increase consumer protection and prohibit the unauthorized sale of telephone records.

            The anticipated fiscal impact associated with this legislation is undeterminable.  However, there may be a fiscal impact to the Attorney General’s Office related to increased caseloads for prosecution of persons who procure and sell telephone records through unauthorized, fraudulent or deceptive means. 

Provisions

1. Prohibits a person from doing any of the following:

a) knowingly procuring, attempting to procure, soliciting or conspiring with another to procure a telephone record of any Arizona resident without the authorization of the customer to whom the record pertains or by fraudulent, deceptive or false means.

b) knowingly selling or attempting to sell the telephone record of any Arizona resident without the authorization of the customer to whom the record pertains.

c) receiving a telephone record of any Arizona resident knowing that the record has been obtained without the authorization of the customer to whom the record pertains or by fraudulent, deceptive or false means.

2. Requires telephone companies that maintain the telephone records of an Arizona resident to establish reasonable procedures to protect against unauthorized or fraudulent disclosure of telephone records and states no private right of action is authorized due to the establishment of the procedures.

3. States that the provisions do not prevent any action by a law enforcement agency from obtaining telephone records in connection with the official duties of the agency.

4. Allows a telephone company to obtain, use, disclose or permit access to any telephone record either directly or indirectly through its agents when:

a) it is authorized by law.

b) lawful consent of the customer or subscriber is obtained.

c) it is necessary to the rendition of the service or protection of the rights or property of the service provider or to protect users and carriers from fraudulent, abusive or unlawful use of or subscription to these services.

d) the telephone company reasonably believes that an emergency involving the immediate danger of death or serious injury to any person justifies disclosure of the information to a governmental entity.

e) the record is released to the National Center for Missing and Exploited Children in connection with a missing or exploited child report.

5. States that the telephone record requirements do not apply to or expand the obligations and duties of any telephone company to protect telephone records beyond those otherwise established by federal and state law.

6. States the telephone record requirements do not apply to a telephone company or its agents or representatives who act reasonably and in good faith.

7. Makes any violation of the telephone record prohibitions a violation of the Consumer Fraud Act.

8. Allows a person whose telephone records were procured, sold or received in violation of the telephone record requirements to recover from the person that committed the violation, in a civil action, the following:

a) preliminary and other appropriate relief.

b) damages equal to the sum of the actual damages suffered by the person and any profits made by the violator as a result of the violation. Damages must be at least $1,000.

c) reasonable attorney fees and other litigation costs that are reasonably incurred.

9. Prohibits a civil action from being commenced more than two years after the date on which the claimant first discovered or had a reasonable opportunity to discover the violation.

10. States that a person who violates the telephone record requirements is guilty of a class 1 misdemeanor and is subject to the forfeiture of any personal property used or intended to be used to commit the offense.

11. Prescribes definitions.

12. Becomes effective on the general effective date.

Amendments Adopted by Committee of the Whole

· Includes information that indicates the location from which or to which phone calls were made as part of a telephone record.

House Action Senate Action

COM               2/15/06     DP    8-0-0-1                      CED                3/29/06     DP     6-0-2-0

3^rd Read           3/13/06              60-0-0-0                    3rd Read         4/24/06               28-2-0-0

Prepared by Senate Research

April 25, 2006

BP/LH/ac