BT has admitted to online UK tech site The Register that it has secretly used its own customers' data to test the controversial Phorm's advertising technology in June 2007 and strongly denied any wrongdoings when customers experienced weird "phishing-like" redirects then.
BT's admission could land it in hot waters and the telecom firm could potentially face legal action from its user base and the Foundation for Information Policy Research (FIPR), a government advisory group on internet issues, has already sent a letter to the Information Commissioner telling him that Phorm is illegal.
The Register has also revealed that Phorm itself has a murky past when it was previously known as 121media, an entity with some expertise in spyware technology.
This has prompted several security firms to confirm that they would categorise Phorm's Cookies as adware; something that will surely land you in trouble if your ISP suddenly decides to bundle Phorm like services with free broadband (think Carphone Warehouse).
But that's only part of the story : Badphorm.co.uk lists on their website a comprehensive FAQ which shows how powerful, web-savvy and influent Phorm could be.
Public records show that Phorm is a listed company with approximately 150 employees, with offices in London and New York.
On their board of directors is the former Chairman / CEO of ATT, the current Vice-Chairman of Rothschild bank, the former president of the Coca-Cola company worldwide, the former head of strategy of ATT.
Their executive team looks like a "who's who" of stars from the internet and media industries: a founding member of Doubleclick, the former Head of technology of Atlas, the former CTO of BT retail, the former head of sales of Expedia, the former head of communications of Yahoo Europe, and so on.
Tim Berners-Lee made a rare appearance to criticise the encroachment of personal privacy by ISPs through the use of Phorm or similar tracking systems and it looks as if he won't be the last.