Beginning sentences with the present participle
Fearing that directive settings could be misused by third parties (e.g.: insurance companies, telemarketers, etc) the system has been designed to limit and (in some cases) prevent directive lookups.
"Fearing" must be connected to noun or pronoun. The author declares that the system was fearing misuse of directive settings.
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My rewrite:
"The system has been designed to limit and prevent direct lookups because directive settings could be misused by third parties."