The Federal Communications Commission (“FCC”) proposed placing a 10$ million fine on two telecommunications carrier companies, TerraCom and YourTell America, for several violations of privacy laws.

According to the FCC complaint, the companies stored consumers' sensitive information, including Social Security numbers, names, addresses, and driver's licenses, on unprotected internet servers accessible to public view, in a readable format and in doing so, the companies allegedly exposed up to 305,000 consumers to identity theft and fraud. In this regard, the companies are alleged to have failed to reasonably secure their customers' personal information, by deceptive and misleading representation of customer privacy protection, and their subsequentfailure to notify all potentially affected consumers upon learning about the security breach, thereby depriving them of any opportunity to take the necessary steps to protect their personal information from misuse.

This is the second major enforcement action the FCC has taken to protect consumer privacy in the last two monthsThe previous action relates to the $7.4 million settlement with Verizon, concerning the company's marketing practices which were found to breach privacy laws.

We believe these enforcement actions reflect the FCC's new strict approach towards breaches of privacy laws, and recommend our clients to adhere to the applicable laws and regulations concerning data protection and security of communication.