Verizon and AT&T vow to stop selling cellphone location data to brokers

Verizon and AT&T have pledged to stop providing information on phone owners’ locations to data brokers, stepping back from a business practice that has drawn criticism for endangering privacy.

The data has apparently allowed outside companies to pinpoint the location of wireless devices without the device owners’ knowledge or consent. Verizon said that about 75 companies have been obtaining its customer data from two little-known California-based brokers that Verizon supplies directly: LocationSmart and Zumigo.

Verizon became the first major carrier to declare it would end sales of such data to brokers that provide it to others. It did so in a Friday letter to Sen. Ron Wyden, an Oregon Democrat who has been probing the phone location-tracking market. AT&T followed suit Tuesday after the Associated Press reported the Verizon move.

Neither company said it is getting out of the business of selling location data. Verizon and AT&T are the two largest U.S. mobile carriers in terms of subscribers.

Verizon’s chief privacy officer, Karen Zacharia, said her company would be careful not to disrupt “beneficial services” such as fraud prevention and emergency roadside assistance. AT&T spokesman Jim Greer cited similar reasons for cutting off the intermediaries “as soon as practical.”

Last month, Wyden revealed abuses in the lucrative but loosely regulated field involving Securus Technologies and its affiliate 3C Interactive. Verizon says its contract was approved only for the location tracking of outside mobile phones called by prison inmates.

Verizon notified LocationSmart and Zumigo — privately held companies that are based in Carlsbad and San Jose, respectively — that it intends to “terminate their ability to access and use our customers’ location data as soon as possible,” Zacharia wrote.

Location data from Verizon and other carriers make it possible to identify the whereabouts of nearly any phone in the United States within seconds. Popular commercial uses for so-called geolocation tracking include emergency roadside assistance; keeping tabs on packages, vehicles and employees; bank fraud prevention; and targeted marketing offers.

The cutoff won’t affect users’ ability to share locations directly with apps and other services. Rather, it deals with the practice of selling data to third parties with which users have no direct contact.

Wyden wrote to all four major U.S. wireless carriers May 8 after learning about a web portal that let law officers track Americans’ locations without proper oversight. A former sheriff in Missouri has been accused of using Securus data for unauthorized surveillance of a judge, a sheriff and state highway patrol officers.

Days later, a Carnegie Mellon University security researcher discovered a security flaw in LocationSmart’s website that could have allowed any reasonably sophisticated hacker to secretly track almost any phone in the U.S. or Canada.

Wyden asked the carriers to identify which third parties have been acquiring carrier location data and to provide details such as any third-party sharing of location data without customer consent. His office shared the companies’ responses with the Associated Press.

None of the four carriers named any third parties, with two exceptions. One was Securus, which all four carriers have since cut off. The other was 3CInteractive, the reseller that supplied Securus.

“Verizon did the responsible thing and promptly announced it was cutting these companies off,” Wyden said in a statement, referring to the aggregators as “shady middle men.”

Wyden has complained that people’s physical security could be endangered if the information falls into the wrong hands.

“The big concern was that this was probably the tip of the iceberg,” said Laura Moy, deputy director of the Georgetown Center on Privacy and Technology. She said Verizon’s move “indicates that it cannot actually police this process, that it doesn’t have the ability.” Nor can the other carriers, she said.

Verizon and AT&T did not respond to questions from the AP on whether and how they plan to sell location data directly to companies or individuals instead of relying on the two California companies. Sprint and T-Mobile did not immediately respond Tuesday to emailed requests for comment.

AT&T and T-Mobile, No. 2 and 3, respectively, in number of customers, said in letters to Wyden that they allow authorized third parties to access customer location data only if the affected customers have given consent or if it is required by law — for instance, a court order. Verizon said the same.

Sprint said account holders must “generally be notified” if the information is to be used so they can decide whether they consent. T-Mobile has offered to buy Sprint for $26.5 billion.

The carriers left most of Wyden’s questions unanswered — such as how many of their customers had been affected by location sharing to which they never agreed.

Gigi Sohn, who was a top advisor at the Federal Communications Commission in the Obama administration, said Verizon has lately proved itself a “shining example” on privacy. “I think they understand that bad privacy practices are bad for business,” she said.

Moy said Verizon may have been motivated by a $1.4-million FCC fine for an earlier episode in which the company surreptitiously tracked its wireless customers’ online travels with a “supercookie” for at least 22 months beginning in December 2012.

Verizon subsequently signed a consent order with the FCC promising to restrict that tracking to customers who affirmatively agreed to it.

The case also spurred FCC rules that would have required carriers to obtain consent for selling their customers’ wireless location data. But the GOP-led Congress quashed those rules last year.

Analysts say it’s difficult to gauge the size of the location-tracking aggregation market.

On its website, LocationSmart claims it is the No. 1 “location as a service” provider with data from every top-tier U.S. wireless carrier and more than 200 enterprise customers. Zumigo appears oriented to the financial sector, and it lists Intel, Wells Fargo and Capital One among investors.

Rich Mogull, an analyst with Arizona-based Securosis LLC, said telecom providers track and sell location data as a matter of course, with a wide variety of businesses including Google extensively attempting to compile location datasets on consumers.

“We are all tracked, all the time, primarily for marketing purposes, by such a large number of companies I’m not sure I would even know where to start the math,” Mogull said.

UPDATES:

11:55 a.m.: This article was updated with AT&T joining Verizon in announcing the cutoff and with comments from AT&T spokesman Jim Greer and analyst Rich Mogull.

This article was originally published at 8:55 a.m.