Court Declares Selling Location Data Without Consent Is Illegal for Carriers
294A major legal setback for Verizon, T-Mobile, and AT&T in their fight over customer location data. The US Court of Appeals for the 2nd Circuit has ruled against Verizon, confirming that selling location data without user permission is illegal and upholding a hefty fine. This decision adds to a complex web of court battles involving the Federal Communications Commission (FCC) and the telecom giants.
The FCC had fined Verizon $46.9 million last year for selling customer location info without proper consent. Verizon challenged the fine, arguing that the law didn’t cover device location data and that their rights to a jury trial were violated. But the court dismissed these claims, ruling that the data Verizon sold qualifies as protected customer proprietary network information. The court also pointed out that Verizon had the opportunity to challenge the fine in court but chose to pay it instead.
How the Court Reached Its Decision on Location Data
Verizon’s program involved selling access to wireless customer location info through third-party companies called aggregators. Verizon contracted with two, LocationSmart and Zumigo, which then resold the data to numerous third-party providers. Instead of notifying customers or getting their consent directly, Verizon delegated those responsibilities to the aggregators. This system was exposed when a 2018 New York Times article revealed security breaches and misuse of the data.
The court clarified that the law covers more than just call location info. It includes any customer data related to the location of a telecommunications service, which clearly applies to device location data. Verizon argued that the law didn’t extend to device info, but the court disagreed, citing the law’s language that defines protected information as data made available because of the customer-carrier relationship. Since Verizon’s data falls under this definition, the law applies.
Legal Battles and the Role of the Jury Trial
Verizon claimed that the FCC violated its Seventh Amendment right to a jury trial. The court responded that Verizon could have preserved that right by refusing to pay the fine and instead fighting it in court. Instead, Verizon chose to pay the penalty and seek immediate judicial review, which waives the jury trial right.
This stands in contrast to AT&T’s case, which was decided in the Fifth Circuit. There, the court sided with the FCC, saying the agency acted as prosecutor, judge, and jury—violating the right to a jury trial. That decision was influenced by a recent Supreme Court ruling that civil penalties for securities fraud require a jury trial. But the 2nd Circuit pointed out that telecom law involves different rules, and Verizon had the option to challenge the fine in court before paying.
Today’s decision makes it clear that selling customer location data without consent breaches the law. It also emphasizes that companies can’t dodge penalties by paying fines without a proper trial, especially when they have the chance to fight the charges beforehand. As different courts have issued conflicting rulings on similar cases, the issue might need to be settled by the Supreme Court. That could have big implications for how the FCC enforces privacy laws and issues fines in the future.
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