Original article Total Telecom:
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The court ruled that Verizon’s actions had clearly triggered the Communication Act’s privacy protections
This week, the US Court of Appeals for the 2nd Circuit as rejected Verizon’s appeal to overturn a $46.9m fine issued to it last year for illegally handing customer location data to third parties without consent.
In its appeal, Verizon said that the FCC’s decision had been “arbitrary and capricious”, arguing that the location data was not protected under the law used by the FCC to issue the fine. The operator also said the fine was excessive and violated its Seventh Amendment right to a trial by jury.
The three judges, however, unanimously rejected these accusations.
“We disagree [with Verizon],” the court ruling said. “The customer data at issue plainly qualifies as customer proprietary network information, triggering the Communication Act’s privacy protections. And the forfeiture order both soundly imposed liability and remained within the strictures of the penalty cap. Nothing about the Commission’s proceedings, moreover, transgressed the Seventh Amendment’s jury trial guarantee. Indeed, Verizon had, and chose to forgo, the opportunity for a jury trial in federal court. Thus, we DENY Verizon’s petition.”
The ruling relates to an FCC decision last year, which saw the regulator issue fines totalling almost $200 million to T-Mobile, AT&T, and Verizon for sharing customer data to ‘aggregators’ without prior consent. These data aggregators, such a LocationSmart and Zumigo, then resold or syndicated this data to third parties.
At the time, the FCC summarised its findings by saying the carriers had failed to take “reasonable measures” to protect their customers’ data from unauthorised use.
“The FCC Enforcement Bureau investigations of the four carriers found that each carrier sold access to its customers’ location information to “aggregators,” who then resold access to such information to third-party location-based service providers,” explained the FCC in its findings. “In doing so, each carrier attempted to offload its obligations to obtain customer consent onto downstream recipients of location information, which in many instances meant that no valid customer consent was obtained. This initial failure was compounded when, after becoming aware that their safeguards were ineffective, the carriers continued to sell access to location information without taking reasonable measures to protect it from unauthorized access.”
The regulator was first made aware that the mobile network operators were sharing location data to these aggregators in 2018. Fines were first proposed in 2020, but disagreements within the Commission led to delays in their implementation until 2024.
T-Mobile faced the lion’s share of the fines, with the FCC ordering it to pay roughly $80 million, plus a further $12 million on behalf of Sprint, with whom they merged in 2020. AT&T and Verizon were fined $57 million and $47 million, respectively.
All three operators appealed the fines. In April, AT&T successfully had its fine overturned, in part due to the process denying the operator the option of a jury trial. T-Mobile was less fortunate, however, with the U.S. District Court of Appeals for the District of Columbia rejecting their appeal last month.
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