Another case of pretexting

Alisa Roth Nov 8, 2006

This story omitted the fact that Allied Capital denies any wrongdoing.

KAI RYSSDAL: If criminal indictments aren’t enough to convince you something’s a bad idea, we’re not sure what might be. Hewlett-Packard’s former chairman of the board was indicted last month over the company’s use of pretexting. Lying, essentially, to get a reporter’s phone records. It was all part of an investigation into leaks from the company’s board of directors. The New York Times reports today on another, albeit lower-profile, case Marketplace’s Alisa Roth has more now from New York.

ALISA ROTH: Allied Capital is a publicly traded company that lends money to smaller businesses. Five people, including a hedge-fund manager and a financial columnist, say the company used pretexting to access their phone bills illegally. All five had been publicly critical of the company. Rob Douglas is an information security consultant. He says companies may call it something else, but pretexting is essentially corporate espionage. And everybody’s doing it.

ROB DOUGLAS: And if anything, over the last two decades the use of pretext to obtain phone records, banking records and other information in the corporate environment has become quite routine.

New technology means there are more places where our personal data is stored. And more people have access to it.

Pretexting isn’t always easy to prosecute, though. Only 12 states have laws that specifically make pretexting illegal. And one of those — California’s — doesn’t go into effect until next year. There’s no federal law that explicitly outlaws the practice, either.

Joel Reidenberg directs the Center on Law and Information Policy at Fordham University. He thinks the hoopla around the Hewlett-Packard case will mean many more pretexting lawsuits in the future.

JOEL REIDENBERG: The laws come from a variety of different places, but the practice itself really isn’t legal under a variety of legal doctrines.

As for the five who say Allied Capital was spying on them, they’ve spoken with the FBI and they believe their case is being investigated.

In New York, I’m Alisa Roth for Marketplace.

There’s a lot happening in the world.  Through it all, Marketplace is here for you. 

You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible. 

Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.