While very effective when employed judiciously at some point you, as a client, must know what is and is not ethical or legal when an agency is conducting an investigation on your behalf.  The following article is a great primer on the use of investigative pretexting, the legal issues involved and what you can do to ensure that your best efforts will not cross the line:

 

PRIMER FOR INVESTIGATIVE PRETEXT (A guide for today's investigator)
by Alan Pruitt, PI, Private Investigator, Owner - Webcognita

DEFINITION(S):

pre·text n.

An ostensible or professed purpose; an excuse.
An effort or strategy intended to conceal something.

tr.v. pre·text·ed, pre·text·ing, pre·texts
To allege as an excuse.

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[Latin praetextum; from neuter past participle of praetexere; to disguise :
prae-, pre- + texere, to weave; see teks- in Indo-European Roots.]
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Source: The American Heritage® Dictionary of the English Language, Fourth Edition
Copyright © 2000 by Houghton Mifflin Company.
Published by Houghton Mifflin Company. All rights reserved.
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pretext \Pre"text\ (origin?; 277), n. [F. pr['e]texte, L. praetextum, fr.
praetextus, p. p. of praetexere to weave before, allege as an excuse; prae before + texere to weave. See Text.] Ostensible reason or motive assigned or assumed as a color or cover for the real reason or motive; pretense; disguise.

They suck the blood of those they depend on, under a pretext of service and kindness. --L'Estrange.

With how much or how little pretext of reason. --Dr. H. More.

Syn: Pretense; excuse; semblance; disguise; appearance. See Pretense.

Source: Webster's Revised Unabridged Dictionary, © 1996, 1998 MICRA, Inc.
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pretext n 1: something serving to conceal plans; a fictitious reason that is concocted in order to conceal the real reason [syn: stalking-horse] 2: an artful or simulated semblance; "under the guise of friendship he betrayed them" [syn: guise, pretence]

Source: WordNet ® 1.6, © 1997 Princeton University

MEANINGS:

Roget's Thesaurus goes on to illustrate the meaning with:

I. VOLITION IN GENERAL
2. Causes of volition

[Ostensible motive, ground, or reason assigned] Pretext.

[Nouns] pretext, pretense, pretension, plea; allegation, advocation; ostensible motive, subterfuge, obtensible ground, obtensible reason, phony reason; excuse (vindication) [more]; color; gloss, guise, cover.

loophole, starting hole; how to creep out of, salvo, come off; way of escape.

handle, peg to hang on, room, locus standi; stalking-horse, cheval de bataille, cue.

pretense (untruth) [more]; put off, dust thrown in the eyes; blind; moonshine; mere pretext, shallow pretext; lame excuse, lame apology; tub to a whale; false plea, sour grapes; makeshift, shift, white lie; special pleading (sophistry) [more]; soft sawder (flattery) [more].

[Verbs] pretend, plead, allege; shelter oneself under the plea of; excuse (vindicate) [more]; lend a color to; furnish a handle; make a pretext of, make a handle of; use as a plea; take one's stand upon, make capital out of , pretend (lie) [more].

[Adjectives] ostensibly (manifest) [more]; alleged, apologetic; pretended [more].

[Adverbs] ostensibly; under color; under the plea, under the pretense of, under the guise of.

II. MODES OF COMMUNICATION
Untruth.

[Antonyms: veracity.]

[Nouns] untruth, falsehood, lie, story, thing that is not, fib, bounce, crammer, taradiddle, whopper.

forgery, fabrication, invention; misstatement, misrepresentation; perversion, falsification, gloss, suggestio falsi; exaggeration [more].

invention, fabrication, fiction; fable, nursery tale; romance (imagination) [more]; absurd story, untrue story, false story, trumped up story, trumped up statement; thing devised by the enemy; canard; shave, sell, hum, travelerís tale, Canterbury tale, cock and bull story, fairy tale, fake, press agent's yarn; claptrap.

myth, moonshine, bosh, all my eye and Betty Martin, mare's nest, farce.

irony; half truth, white lie, pious fraud; mental reservation (concealment) [more].

pretense, pretext; false plea [more]; subterfuge, evasion, shift, shuffle, make-believe; sham (deception) [more].

profession, empty words; Judas kiss (hypocrisy) [more]; disguise (mask) [more].

[Verbs] have a false meaning.

[Adjectives] untrue, false, trumped up; void of foundation, without- foundation; fictive, far from the truth, false as dicer's oaths; unfounded, ben trovato, invented, fabulous, fabricated, forged; fictitious, factitious, supposititious, surreptitious; elusory, illusory; ironical; soi-disant (misnamed) [more].

[Phrases] se non e vero e ben trovato; "where none is meant that meets the ear" [Milton]

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-- Lot's of verbage to ponder! I like my own version, "Truth By Guile".

CASE LAW:

FTC v. Rapp, CA 99-WM-783 (D.Col.)

The actions of James Rapp, a private investigator who owned a firm called Touch Tone Information, specializing in pretext investigations, resulted in an indictment and conviction for racketeering, with a 75-day jail sentence and four years of probation. The verdict was handed down in Colorado in January 2000.

Bottom line: Do not use pretext to gain access to banking and financial customer data.

- While this may seem like a common sense issue, you cannot legally access someone else's financial records and bank information. This is among the most heavily protected areas of personal privacy. The recently passed Gramm-Leach-Bliley Financial Services Modernization Act specifically makes gaining unauthorized access to banking and financial customer data through pretext a criminal offense.

There are investigators who like to grab all available information when conducting an investigation. This is wasteful, dangerous and unnecessary. While such information may prove useful during an investigation, you might also gain it through previously submitted financial statements, Dun & Bradstreet reports and similar data checks, as well as through conducting interviews. The flip side is the inadvertent creation of a claim for the insured for invasion of privacy - a claim that would likely prevail.

Insurance Claim Information:

- Several states, 17 at last count, have adopted some version of the National Association of Insurance Commissioner's Insurance Information and Privacy Protection Model Act (NAIC 670-1), which states:

No insurance institution, agent or insurance support organization shall use or authorize the use of pretext interviews to obtain information in connection with an insurance transaction; provided, however, a pretext interview may be undertaken to obtain information from a person or institution that does not have a generally or statutorily recognized privileged relationship with the person about whom the information relates for the purpose of investigating a claim where, based upon specific information available for review by the commissioner, there is a reasonable basis for suspecting criminal activity, fraud, material misrepresentation or material non-disclosure in connection with the claim.

Of particular note, the state of Minnesota specifically prohibits any type of pretext in Chapter 72A of the Minnesota Insurance Statute.

Food Lion, Inc. v. Capital Cities/ABC, Inc., 964 F.Supp. 956 (M.D. N.C.
1997)

For those outside Minnesota, pretext remains a viable means for gaining information. This was evidenced in the 1997 Food Lion, Inc. v. Capital Cities/ABC, Inc., 964 F.Supp. 956 (M.D. N.C. 1997) case. Many remember the multi-million-dollar lower court verdict, which was reduced to just $2 by the 4th Circuit Court of Appeals. While not endorsing pretext, it did establish that the mere use of a ruse was not sufficient to create damages.

Further examples of cases where pretext has been deemed intrusive include:

Green v. State Farm Fire and Casualty, 667 F.2d 22 (9th Cir. 1982)

The circumstances in this case far exceed the normal pretext. In this instance of suspected arson, the adjuster posed as a state policeman, threatened the insured with prosecution (in the role of adjuster) and implied to neighbors that the insured had set the fire. It is the view of this author that the $250,000 in punitive damages had more to do with the nature of the ruse and the adjuster's conduct than the mere use of the pretext.

Redner v. Worker's Compensation Appeals Board, 485 P.2d 799 (Cal. 1971)

In this case, the pretext again went far beyond an indirect interview. An investigator induced the claimant to drink to intoxication and then saddle and ride a horse, all the latter of which was videotaped by the investigator. Here, again, the overzealous tactics of the investigator are more in question than the pretext element itself.

Turner v. General Adjustment Bureau, 832 P2.d 62 (Utah App 1992)

As evidence of many courts' permitting pretext as a viable investigative tool, I offer the following:

Turner v. General Adjustment Bureau, 832 P2.d 62 (Utah App 1992) - In this case, investigators were repeatedly invited into the claimant's home while posing as marketing representatives. They only made note of the claimant's comments about her activities and did not videotape her while inside her residence. Videotape was only obtained outside the claimant's residence. As such, the court ruled that the investigators' actions caused no damages because the time inside the house was brief and for a purpose permitted by the claimant.

The seemingly critical element is that they made no attempt to alter the claimant's behavior, nor did they videotape her within the residence. By acting with a degree of restraint, the investigators showed respect for her privacy. This may seem a subtle nuance, but it is the difference between actionable behavior and acceptable behavior.

Another important consideration is that pretext of individuals other than the pretext cannot likely result in a privacy violation. Claimants who have already volunteered information to neighbors can hardly call foul when that information is conveyed to other parties, provided that there is no privileged relationship.

If, for example, an investigator were to pose as a state investigator conducting an investigation of the insurance company to interview the claimant's attorney, and in doing so managed to elicit information about the claimant not commonly known to others, this would be a clear breach of the insurance statute, not to mention a host of others. A good rule of thumb is to treat claims-related pretext as a parachute. If the plane (your usual method of investigating) is failing, jump out and pull the cord. If you are progressing through the investigation smoothly, however, there is really no need for pretext. If, for example, you were already getting videotape of the claimant's activities in a bodily injury case, why would you bother with a pretext? Remember: Parachute!

If you hire outsiders to conduct your investigations, I highly recommend requiring them to add you as an additional insured on their E&O policies. Otherwise, their coverage affords you no real insulation, and you'll end up spending money explaining why it wasn't your fault. If you fail in your efforts, you'll pay and then spend some more money subrogating the claim against your vendor. A little work up front gathering documentation will prevent that.

In addition, get to know your investigative vendors. Find out what types of training their personnel have, what their standards are and how well they understand your concerns and needs. Most importantly, get references, then call them and find out what it is like to work with the vendor on a daily basis. Ideally, these references will have done business with your prospective vendor for a couple of years.

You, in turn, should spell out what is - and is not - permissible during the course of conducting investigations for you. Make it part of a hold-harmless and have your prospective vendor sign it. This is no guarantee a problem won't occur, but spelling it out on paper clears up communication and reduces some of the liability in the event of a problem.

-- This article is Copyright 2002 (c) Alan Pruitt. Electronic reproduction rights are explicitly granted with the stipulation that this authorship and permission note must remain attached.

Alan Pruitt is a licensed Private Investigator with over twenty years of experience in the private and public sector. In 2002, he established an Internet privacy consulting practice known as Webcognita. Alan is also a frequent guest columnist for investigative related publications in the United States and in Europe. His views of the investigation industry are frequently shared with investigators in a variety of Internet forums. Webcognita maintains a web site at http://www.webcognita.com and you can contact Alan at apruitt@webcognita.com.