Dec. 2, 2011
A group of consumers filed a nationwide class-action lawsuit claiming that smartphone manufacturers HTC Corporation (TWSE: 2498), HTC America, Inc. and Samsung Electronics Co., Ltd. (KSE: 005930.KS) use software developed by Carrier IQ, Inc. ("CIQ") that illegally intercepts incoming text messages and captures users' key strokes-including those used to compose email and text messages or to dial numbers-without consumers' knowledge or permission.
In mid-November, software developer Trevor Eckhart published a video blog illustrating the operation of the CIQ software recording keystrokes, including information sent to secure websites using HTTPS security protocols used in e-commerce and other security-sensitive sites. After Eckhart published his discovery and documents he found on CIQ's website, CIQ accused him of copyright violations and threatened legal actions unless he capitulated to the company's demands. The Electronic Frontier Foundation, a public-interest digital rights watchdog stepped in to defend Eckhart and CIQ later apologized to Eckhart and rescinded its demands.
According to CIQ, its software is embedded on smartphones to allow the company to collect data for the benefit of cellular carriers and device manufacturers, which is important to improving customer experience, such as logging information related to dropped calls. CIQ says its program does not log keystrokes or intercept messages and it does not store or resell the information.
The lawsuit alleges that, in reality, the program does record keystrokes and the content of messages, and could transmit the information to third parties, possibly including information sent to secure websites using HTTPS security protocols used in e-commerce and other security-sensitive sites such as banking.
"Given our dependence on smartphones, we rely on the assumption that our personal information is protected from third parties," said Steve W. Berman, the attorney representing the plaintiffs. "Yet, it appears that Carrier IQ has violated this trust. For example, Mr. Eckhart's video shows CIQ software intercepting incoming text messages, and it also shows that the software captures dialed numbers and sensitive information sent through protected websites."
The complaint was filed yesterday on behalf of four smartphone users and names smartphone manufacturers HTC and Samsung as defendants along with CIQ. The lawsuit could be amended to include other smartphone manufacturers that embed the CIQ software on their devices.
"We believe that CIQ was intercepting and collecting private information from smartphone users that they had no right to monitor or record," Berman added. "Their actions, in concert with phone manufacturers and the various carriers, should raise the hackles of anyone concerned about privacy in the broadest terms."
The suit, filed in the U.S. District Court for the Northern District of California, accuses the companies of violating the Federal Wiretap Act and California's Unfair Business Practice Act. The Federal Wiretap Act prohibits the unauthorized interception or illegal use of electronic communications.
The lawsuit asks the court to award damages under the Federal Wiretap Act, and prevent companies from including similar software in future smartphones.
Hagens Berman is interested in talking with smartphone users who used devices that run CIQ software. The firm can be contacted by calling 206-623-7292.
More information is available at http://www.hbsslaw.com/cases-and-investigations/ciq.