WTF, BT? British ISP Spies on its Customers

by jordan | April 5, 2008 at 12:51 pm | 474 views | 1 comment

BT has admitted that it secretly used customer data to test Phorm's advertising targeting technology last summer, and that it covered it up when customers and The Register raised questions over the suspicious redirects.

The national telecoms provider now faces legal action from customers who are angry their web traffic was compromised.

Stephen Mainwaring, a BT Business customer in Weston-super-Mare, believes sensitive banking data relating to his online horse racing business was press-ganged into a trial of an unproven technology. He suffered sleepless nights after detecting the dodgy DNS requests, and said today: "It is very likely that I and others will take legal action against BT for what they did last summer."

In a statement, BT said: "We conducted a very small scale technical test of a prototype advertising platform on one exchange in June 2007. The test was specifically conducted to evaluate the functional and technical performance of the platform.

"Absolutely no personally identifiable information was processed, stored or disclosed during this trial. As with all service providers, it is important for BT to ensure that, before any potential new technologies are employed, they are robust and fit for purpose."

To state that you're spying on users without gathering personal info is just silly-- no reasonable person can be expected to believe such a claim... and indeed users aren't buying the BT party line, with lawsuits brewing as we speak. Turns out that BT, along with Virgin Media and Carphone Warehouse have pimped out their users to Phorm, a company that's elbow-deep in the spyware biz:

Data will be fed into the Open Internet Exchange, Phorm's advertising network, where advertisers will pay to target interest groups. Frequent visits to the BBC's Top Gear site might result in being served up more car ads, for example.

In exchange, the ISP trio will get a cut of new revenue. Analysts estimate BT's cut will be £85m in 2010.

There's no word on when BT, Virgin Media and Carphone Warehouse will begin sending customers' browsing information; but now that the broadband business is a high-volume, low-margin business, it's no surprise the providers are hungry for extra cash flow. Their choice of partner is ringing alarm bells in some quarters, however.

Phorm is run by Kent Ertegrul, a serial entrepreneur whose past ventures include selling joyrides on Russian fighter jets. Previously, his most notable foray online was as the founder of PeopleOnPage, an ad network that operated earlier in the decade and which was blacklisted as spyware by the likes of Symantec and F-Secure.