FCC proposes 'know-your-customer' rule to curb phone scams, threatening burner phone anonymity

The US Federal Communications Commission has released a proposal for a new rule requiring cellular providers to implement know-your-customer requirements. The rule would mandate that providers obtain and retain the name, physical address, government-issued identification number, and an alternate telephone number of any new or renewing customer before granting access to services. The FCC describes the measure as akin to money-laundering laws designed to reduce scamming on phone networks.

Under the proposal, providers would be required to obtain and retain the name, physical address, government-issued identification number, and an alternate telephone number of any new or renewing customer before granting access to services. The FCC describes the measure as akin to money-laundering laws, intended to make it more difficult for scammers to exploit phone networks.

Privacy advocates argue the rule threatens anonymity for journalists, whistleblowers, and activists, and would curtail the privacy services of carriers such as Phreeli. The FCC is accepting comments on the proposal until June 25.

Obtaining a phone number without revealing identifying information has remained entirely legal in the US, whether through buying temporary burner phones or registering an account with a privacy-preserving phone carrier. The FCC’s approach is compared to money-laundering laws, suggesting a regulatory framework focused on financial-style transparency to combat fraud.

Phreeli is a newly launched phone carrier that has previously marketed its service as a way to protect users from giant surveillance and data mining operations. The rule would specifically curtail the privacy promises of Phreeli, a newly launched phone carrier that currently allows users to register with only a ZIP code.

Phreeli founder Nicholas Merrill stated the service aims to help people live without feeling watched or exploited by surveillance and data mining operations. It is unclear whether the FCC will finalise the rule in its current form or if it will be amended following the public comment period.

The long-term operational impact on specific privacy carriers like Phreeli is uncertain, as they may choose to exit the market or alter their business models to comply. The extent to which this rule will actually reduce scamming on phone networks is not yet quantified.