AT&T, Sprint Sued by Customers Over Tracking

By Karen Gullo - Dec 3, 2011 12:01 PM GMT+0700

AT&T Inc. (T), Sprint Nextel Corp. (S), Apple Inc. (AAPL) and T-Mobile USA were sued by mobile phone customers who claim that Carrier IQ Inc. tracking software installed on their phones violates U.S. wiretapping and computer fraud laws.

The lawsuit cites a YouTube report by a technology blogger that purported to show that Carrier IQ software collects information on phone users’ locations, applications and Web browsing and even the keys they press. Four consumers filed a complaint yesterday in federal court in Wilmington, Delaware, seeking to block the carriers and phone makers from using the software.

Carrier IQ software logs user activity and runs in the background of mobile devices. After the YouTube report, the U.S. Senate Judiciary Committee contacted the company seeking information and alleging that the software may violate federal privacy laws, according to a copy of the complaint supplied by David Straite, an attorney for the plaintiffs. The filing of the lawsuit couldn’t be confirmed yesterday through electronic court records.

AT&T and Sprint, the second- and third-largest U.S. wireless providers, said in e-mailed statements on Dec. 1 that the software data is used to improve service performance. Apple stopped supporting Carrier IQ in most products and will remove it completely in a future software update, Natalie Harrison, an Apple spokeswoman, said in a Dec. 1 e-mail.

Punitive Damages

The customers who sued seek compensatory and punitive damages on behalf of all others whose devices contain the so- called rootkit software from Mountain View, California-based Carrier IQ, which is also named as a defendant in the suit. The software is currently installed on 150 million phones worldwide, according to the complaint.

Violations of the federal wiretap laws, which prohibit willful interception of wire or electronic communication, can result in damages of $100 a day per violation, according to the complaint.

Carol Roos, a spokeswoman for Dallas-based AT&T, declined to comment on the lawsuit.

Tom Neumayr, a spokesman for Cupertino, California-based Apple; Leigh Horner, a spokeswoman for Overland Park, Kansas- based Sprint Nextel; and T-Mobile USA (DTE) representatives didn’t immediately return calls seeking comment after regular business hours yesterday. Carrier IQ spokeswoman Mira Woods didn’t immediately respond to an e-mailed request for comment.

In a statement Nov. 16, Carrier IQ said its software is designed to improve user experience and is embedded in devices by manufacturers along with other diagnostic tools. The company also says it doesn’t sell personal subscriber information to third parties.

The case is Pacilli v. Carrier IQ, U.S. District Court, District of Delaware (Wilmington).

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To contact the reporter on this story: Karen Gullo in San Francisco at kgullo@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net