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The operators had a duty to ensure customer data was not misused by third parties, the judges reiterated.
By: Harry Baldock, Total Telecom
This week, the U.S. District Court of Appeals for the District of Columbia has sided with the Federal Communications Commission (FCC), upholding a fine against T-Mobile for illegally selling customer location information (CLI).
The ruling relates to an FCC decision last year, which saw the regulator issue fines totaling 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 summarized its findings by saying the carriers had failed to take “reasonable measures” to protect their customers’ data from unauthorized 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 of the operators have contested the ruling, arguing that the sales did not break the law and that the FCC did not have the authority to impose such penalties. AT&T’s fine was ultimately overturned in April, in part due to the process denying the operator the option of a jury trial.
T-Mobile’s appeal, however, has been less fruitful, with court judges rejecting the company’s calls to overturn or reduce the fines.
“[T-Mobile and Sprint] argue that the undisputed facts do not amount to a violation of the law,” U.S. District Court Judge Florence Pan wrote in the court’s opinion. “The carriers also argue that the commission misinterpreted the Communications Act, miscalculated the penalties and violated the Seventh Amendment by not affording them a jury trial. Because the carriers’ arguments lack merit, we deny the petitions for review.”
In addition, the judges claimed that the operators continued to sell CLI, even after becoming aware of its misuse.
“Several bad actors abused Sprint and T-Mobile’s programs to illicitly access CLI without the customers’ knowledge, let alone consent. And even after Sprint and T-Mobile became aware of those abuses, they continued to sell CLI for some time without adopting new safeguards,” said the judges in their ruling.
T-Mobile has not yet indicated whether it will continue to appeal the decision.
With AT&T’s fine overturned and T-Mobile’s now upheld, eyes will now turn to Verizon, which is currently contesting its $47 million fine in a separate court.
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