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California Sues Data Trace USA for $10 Million

Firm Allegedly Obtained and Sold Confidential Cell Phone Calling Records

March 14, 2006

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California Attorney General Bill Lockyer has filed a $10 million-plus lawsuit against Data Trace USA, Inc., contending that the firm unlawfully obtained and sold wireless customers' confidential monthly call records.

"Data Trace has used fraudulent means to commit outrageous invasions of privacy against California cell phone users," said Lockyer. "Unfortunately, this company is not alone. These shady operators are increasing in number."

The complaint alleges Data Trace and its director of operations, Ilia S. Nicholas, posed as cell phone customers, or agents of customers, to fraudulently obtain consumers' monthly call records from wireless carriers.

They then sold access to those records, and advertised their services on their web site, www.datatraceusa.com, according to the complaint. Nicholas has several aliases, and addresses in New York and Florida.

The complaint accuses the defendants of violating state laws that prohibit unfair business practices, and false or deceptive advertising. Specifically, it claims the defendants misrepresented themselves to obtain the records, according to the complaint, and held out their services as legal, when in fact they were unlawful.

Additionally, the complaint notes, the state Public Utilities Code and the federal Telecommunications Act of 1996 protect the confidentiality of phone users' call records.

The complaint, filed in San Diego County Superior Court, asks the court to issue an order stopping the defendants' unlawful business practices. It also seeks restitution for consumers who suffered financial harm, and at least $10 million in civil penalties.

Investigators from Lockyer's office contacted Data Trace and used an alias and credit card to order the cell phone records of a deputy attorney general. For $220, the investigators obtained not just a list of the calls, but also the time and duration of the calls.

The investigation revealed that Data Trace employees accessed the Verizon Wireless web site, posed as the deputy attorney general, then created an online account through which they obtained the deputy attorney general's call records for the past month.

Primary purchasers of cell phone records sold by Data Trace and similar businesses include spouses and ex-spouses, and institutional clients such as private investigators, debt collection agencies and major finance companies.

Internet sellers proliferated in recent years, creating a retail market for private cell phone records. Some online operations, however, have begun shutting down because of the glare of negative publicity and enforcement actions such as the one filed by Lockyer.

But Lockyer and other law enforcement officials say the industry will thrive underground, where sellers will continue to operate a wholesale market that services institutional clients.

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