The FCC has fined operators for sharing customer location data
by John Kruzel and Andrew Chung
The U.S. Supreme Court is set to hear a dispute on Tuesday concerning fines imposed by the Federal Communications Commission on major American mobile phone operators for allegedly failing to protect their customers’ data, in the latest case challenging the powers of a U.S. regulatory agency.
The legal battle focuses on whether the FCC’s assessment of tens of millions of dollars in penalties against operators such as Verizon Communications and AT&T – before the companies have a chance to be heard in court – exceeded the agency’s authority under the U.S. Constitution. The administration of Republican President Donald Trump defends the FCC’s internal system of financial sanctions.
This is the latest case seeking to determine whether the internal enforcement mechanism of a federal agency violates constitutional provisions guaranteeing a defendant’s right to a jury trial, following a 2024 Supreme Court decision curbing the internal procedures of the Securities and Exchange Commission.
The FCC case stems from fines totaling nearly $200 million that the agency imposed in 2024 on mobile phone operators after finding that the companies had improperly sold access to customer location data to third parties without obtaining user consent.
The penalties included an $80 million fine for T-Mobile; a $12 million fine for Sprint, which T-Mobile acquired in 2020; a $57 million fine for AT&T; and a roughly $47 million fine for Verizon Communications.
Verizon and AT&T paid the fines, but they also filed lawsuits that eventually led to a split among federal appellate courts on the legality of the FCC’s internal process for imposing penalties, known as forfeiture orders.
The 2nd U.S. Circuit Court of Appeals, based in New York, upheld the fine imposed by the FCC on Verizon. The Constitution allows the FCC to provide an initial assessment of penalties as long as an accused party can challenge the government’s collection efforts in court, the 2nd Circuit ruled, prompting Verizon to appeal to the Supreme Court.
In AT&T’s case, the 5th U.S. Circuit Court of Appeals, based in New Orleans, found that the FCC’s initial fault and fine assessment deprived the company of its constitutional right to a jury trial. This decision prompted the FCC to appeal to the Supreme Court.
To defend the FCC’s internal system, Justice Department attorneys argued on behalf of the Trump administration that the agency’s assessments are not binding. If the government were to file a lawsuit, it would allow companies to present their arguments to a jury, the attorneys said in court documents.
Mobile phone operators, on the other hand, argued that the FCC’s system impermissibly displaces internal procedures that belong in courts, depriving companies of their right to a jury trial. The initial FCC assessments, they added, damage the companies’ reputations before defendants have had their day in court.
The Supreme Court, which has a conservative majority of 6-3, has taken a narrow view of the powers of federal agencies in several key decisions in recent years.
In its 2024 ruling on the SEC, the Court struck down as unconstitutional the agency’s internal enforcement of laws protecting investors from securities fraud. The 6-3 decision, rendered by the conservative justices on the Court, declared that the agency’s procedures seeking fraud sanctions that are handled by the SEC itself rather than a federal court violate the Seventh Amendment right to a jury trial.
Last year, the Supreme Court secured a win for the FCC by a 6-3 vote, approving the agency’s method of financing its multibillion-dollar program to expand phone and broadband internet access to low-income Americans and other beneficiaries.
