Verizon’s attempt to escape a multimillion-dollar penalty for selling customer location data without permission has been rejected by a federal appeals court. On Thursday, the U.S. Court of Appeals for the 2nd Circuit unanimously upheld the $46.9 million fine imposed by the Federal Communications Commission (FCC), strengthening the regulator’s authority to hold telecom companies accountable for privacy breaches.
The ruling marks another turn in a complex legal fight over whether carriers can be penalized for monetizing sensitive customer information. While Verizon argued the punishment was unlawful, the judges disagreed, finding that the FCC acted within its authority.
How the Controversy Began
The case stems from revelations in 2018 that major U.S. wireless providers, including Verizon, AT&T, and T-Mobile, had been selling access to customers’ real-time location data. These programs gave outside companies the ability to pinpoint where users were at any given time—often without customers’ knowledge or consent.
The fallout was swift. Reports showed that aggregators and third parties were misusing the data, including one instance where a Missouri sheriff obtained location information without legal approval. In another case, Securus Technologies, a prison communications provider, enabled law enforcement officers to access customer data by uploading unverified documents.
Public outrage pushed the FCC to act, and in 2023 it levied fines against all three carriers. Verizon’s penalty amounted to $46.9 million. T-Mobile and AT&T also faced fines, though their legal challenges have unfolded differently.
Mixed Outcomes for Different Carriers
The telecom industry has fought back in court, with mixed success. AT&T managed to get its fine overturned in the 5th Circuit Court of Appeals, which argued that the FCC had overstepped its constitutional bounds. T-Mobile, however, lost its case in the D.C. Circuit.
These conflicting rulings have raised the stakes. With different appeals courts issuing different decisions, the legal battle could soon make its way to the U.S. Supreme Court. If the high court takes it up, the outcome could reshape the limits of the FCC’s enforcement powers.
Why Verizon Lost Its Case
In the 2nd Circuit, Verizon challenged the fine on two fronts: first, that the location data at issue wasn’t legally protected under the Communications Act, and second, that the company was denied its constitutional right to a jury trial.
The judges rejected both arguments. They ruled that device-based location data clearly falls under the law’s definition of customer proprietary network information, meaning it is subject to privacy protections. They also found that Verizon had options to pursue a jury trial but chose not to.
By paying the fine upfront and going directly to appeal, Verizon effectively forfeited its ability to argue for a jury trial, the court noted. Unlike the Securities and Exchange Commission, which was at the center of the Jarkesy Supreme Court decision in 2024, the FCC cannot force immediate payment without court involvement. That distinction proved crucial in the ruling.
Verizon’s Location Data Program
At the heart of the case is Verizon’s former “location-based services” program, which ran until 2019. The company sold access to customers’ location data through third-party aggregators, primarily LocationSmart and Zumigo. These intermediaries then passed the information to dozens of other businesses.
Verizon delegated responsibility for customer consent to these middlemen, a system the court found inadequate. Investigations showed that in practice, customer safeguards were weak, leaving data vulnerable to misuse.
The lack of oversight was made clear when journalists and watchdogs uncovered widespread flaws in the program, sparking public concern over how easily personal data could be bought, sold, or accessed.
A Larger Privacy Battle
The case underscores broader questions about data privacy in the United States. As carriers and tech companies look to monetize user information, regulators are under pressure to ensure consumer protections keep pace.
Privacy advocates argue that cases like Verizon’s reveal how lucrative and risky the trade in location data can be. Critics say carriers prioritized profit over security, leaving consumers exposed. Telecom companies, on the other hand, maintain that the fines are excessive and that the FCC’s approach creates uncertainty in the marketplace.
The 2nd Circuit’s ruling ensures Verizon will have to pay the fine, but the broader legal conflict is far from over. With different circuit courts coming to different conclusions, the issue is likely headed to the Supreme Court.
A decision at that level could either solidify the FCC’s authority to fine companies for privacy violations or significantly restrict its enforcement power. The stakes are high: if the Supreme Court sides with AT&T’s position, the FCC’s ability to issue penalties against carriers could be sharply curtailed.
For consumers, the fight touches on a fundamental concern—how much control they have over their personal information. Courts increasingly view location data as highly sensitive, and rulings like the 2nd Circuit’s reinforce that telecom companies cannot treat it as just another business asset.
