Six Customer List Theft Horror Stories

Six Customer List Theft Horror Stories

We all want to think that our workers are loyal and honest. Sadly, some are neither. Stealing sensitive information, such as customer lists, is often tempting for employees, who may use the information to launch their own businesses or land higher paying jobs with competitors.

In some instances when the lists are especially valuable, ex-employees might sell them to the highest bidder. Or worse, they might use the lists to commit crimes and victimize your customers.

Ever wondered what can go wrong when employees sneak off with those valuable lists? How hard it might be to win damages in court for the transgression? Here are some recent stories that will satisfy your curiosity.

More precious than gold – the customers who buy it

This is a tale stretching back more than 40 years, to a Minnesota-based precious metals firm called Investment Rarities Inc (“IRI”). An early leader in direct sales of coins and other metal items, IRI invested substantial resources in developing a customer list, as much as $13,500 per name. Over time, hundreds of brokers who logged time on IRI’s payroll made off with portions of the list and built up their own precious metals firms.

Their sales practices became more and more disreputable. The path of the list can be followed through a trail of lawsuits between brokers and actions by the state’s attorney general. Thanks to it being repeatedly stolen, sold, or otherwise passed along, the list contains names of customers who have been targeted time and time again by high-pressure sales tactics, and even one a $194 million coin-based Ponzi scheme.

Dirty dealings in FarmVille

Remember FarmVille? The social-media-based farming game seemingly appeared out of nowhere on everyone’s cell phone and mobile device screen, soon to be followed by dozens of other addictive games in the “social” space. The craze spawned a gold rush and some shifty by employees of the game companies.

Zynga, the creator of FarmVille, went to war with rival Playdom over trade secrets in 2009. Zynga alleged several former employees who left for Playdom took sensitive competitive information, including strategy documents showing the company’s recipe for success on social media.

Zynga claimed the Playdom workers also hacked into its accounts and stole a customer list for players using its popular Texas Hold Em poker game. Playdom then was able to then use scripts to extract data on all of the players, including how much money they were using, and send them online solicitations.

Playdom ultimately sold itself to Disney for $760 million. Zynga reached an undisclosed settlement with Playdom and the former Zynga employees over the theft.

The couple who steals together stays together?

The owners of a Colorado ornamental steel construction firm thought they’d gotten lucky when they found two skilled employees at the same time. Daniel Capehart worked as a project manager at the firm while his wife, Nicole, was a detailer and designer. The two hatched a plot together, though, that was far from their employer’s best interest – to pilfer company records and start a new, rival firm.

First Daniel Capehart emailed his wife a 250-page customer list, vendor lists, and vendor contact information, likely to her work email account so as not to arouse immediate suspicions, according to a lawsuit. Then he announced his resignation and sent an email blast to all of his former company’s customers, the Colorado firm alleged. His wife was fired days later after their purported scheme became apparent. They have denied stealing the lists.

Exterminator becomes the real pest

A Fort Worth, Texas man fired from pest control company Terminix used customer information stolen from his former employer to prey upon the elderly. The man, Hector Garcia Orozco, took names and addresses of more than 1,000 customers and made notes of those who were senile or had other health problems.

While wearing his work uniform and acting as though he still worked for Terminix, he approached these customers, entered their homes, and stole their valuables, according to prosecutors.

According to an indictment, Orozco stole two Rolex watches, two platinum rings, a Montblanc writing pen and more than 140 pieces of flatware and jewelry, which he often turned around and sold to pawn shops. When he was caught, prosecutors said they could prove he had stolen $200,000 worth of heirlooms, though they acknowledged it was possible he had taken much more.

An Idaho staffing agency blood feud

Parts of the West are still pretty “wild,” it seems. A years-long legal battle has been raging in Idaho over shady tactics by staffing agencies, and it has gotten quite ugly. At the center of the dispute is a man who is alleged to have stolen customer lists, embezzled, and started a rival business in violation of a non-computer.

The fight has wandered past the boundaries of the courts. The man, Joe Visser, has claimed that the windows of his staffing firm and home were shot out as a move by the other staffing companies to intimidate him and run him out of town.

A court has ordered Visser to pay thousands of dollars to other staffing agencies for his business schemes. Meanwhile, another staffing agency owner was prosecuted for disturbing the peace.

Not-so-sweet dealings in the world of high-end spas

A spa and perfume boutique in the luxury ski resort town of Aspen has to take a former employee to court over allegations that she was poaching the clientele. Cos Bar, the Aspen-based chain, alleged the former worker took a database of clients to solicit business.

Cos Bar alleged the employee violated the terms in an employee handbook which required her to keep customer records, including the list of clients, confidential. The spa company said she violated it by sending out an email blast, in which she promised to offer services via a “hydra-facial machine” at a lower price than her former employer.

The former employee, who left Cos Bar years ago, denied stealing names from the list and claimed he was engaging in legitimate competitive practices. She claimed her former employer was harassing her and that she had built up her own stable of clients over the years.


Steve Hochfelsen

Steve Hochfelsen is an Orange County, California business litigation lawyer and author.

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