Federal Trade Commission Warns Data Brokers about Possible Fair Credit Reporting Act Violations

The Federal Trade Commission (FTC) has sent letters to ten data broker companies to warn them that their practices could violate the Fair Credit Reporting Act (FCRA). The letters were issued as part of a global privacy protection effort after a test-shopping operation by the FTC indicated the ten companies were willing to sell consumer information without following FCRA requirements. A news release from the FTC about the warning letters is available at http://www.ftc.gov/opa/2013/05/databroker.shtm.

According to the news release, FTC staff members posed as individuals or representatives of companies seeking information about consumers to make decisions related to their creditworthiness, insurance, or employment. Data broker companies that collect, distribute, or sell this information are considered consumer reporting agencies (CRAs) under the FCRA and must reasonably verify identities of customers to make sure they have a legitimate purpose for receiving the information to ensure privacy protection.

Of the 45 companies contacted by FTC staff in the test-shopper operation, ten appeared to violate the law by offering to provide information without complying with FCRA requirements. The ten companies receiving the warning letters from the FTC include:

  • Two companies that appeared to offer “pre-screened” lists of consumers for use in making firm offers of credit: ConsumerBase and one additional company;
  • Two companies that appeared to offer consumer information for use in making insurance decisions: Brokers Data and US Data Corporation; and
  • Six companies that appeared to offer consumer information for employment purposes: Crimcheck.com, 4Nannies, U.S. Information Search, People Search Now, Case Breakers, and USA People Search.

The FTC news release indicates the letters are not an official notice that any of the named companies is subject to the requirements of the FCRA and do not lay out any formal complaints against the companies. Instead, the letters serve to remind the companies to evaluate their practices to determine whether they are consumer reporting agencies, and if so, how to comply with that law. An example of a warning letter from the FTC to a data broker is available at http://www.ftc.gov/os/2013/05/130507databrokerscrimcheck.pdf.

“Finding firms that are selling bulk data outside of the FCRA is like shooting fish in a barrel,” according to Lester Rosen, Founder and CEO of San Francisco-area background check firm Employment Screening Resources® (ESR). “There are numerous internet web sites selling data for employment background checks where there is either no FCRA compliance or its hidden in the small print so an employer is not likely to find it,” he adds.

“This underscores once again the importance of working with a legitimate background screening firm,” explains Rosen, author of ‘The Safe Hiring Manual,’ a comprehensive guide to employment screening. “Membership in the National Association of Professional Background Screeners should be a basic requirement. More to the point, employers should look for firms that are accredited by NAPBS or are at least undergoing the accreditation process.”

Employment Screening Resources® (ESR) – ‘The Background Check Authority®’ – is a nationwide background screening provider accredited by the NAPBS®. For more information about background check solutions from ESR, visit http://www.esrcheck.com or call Toll Free 888.999.4474. For information about ‘The Safe Hiring Manual’ by ESR Founder and CEO Attorney Lester Rosen, visit http://www.esrcheck.com/SafeHiringManual.php.

Source: http://www.ftc.gov/opa/2013/05/databroker.shtm

About Employment Screening Resources® (ESR):

Founded by safe hiring expert Attorney Les Rosen in 1997, Employment Screening Resources® (ESR) – ‘The Background Check Authority®’– provides accurate and actionable information that empowers employers to make informed hiring decisions for the benefit of their organizations, employees, and the public. CEO Rosen literally wrote the book on background checks with “The Safe Hiring Manual” and ESR is accredited by The National Association of Professional Background Screeners (NAPBS), a distinction held by a small percent of screening firms. Employers choosing ESR know they have selected an agency meeting the highest industry standards. To learn more about ESR, visit http://www.esrcheck.com or call toll free 888.999.4474.

About ESR News:

The Employment Screening Resources® (ESR) News blog – ESR News – provides employment screening information for employers, recruiters, and jobseekers on a variety of topics including credit reports, criminal records, data privacy, discrimination, E-Verify, jobs reports, legal updates, negligent hiring, workplace violence, and use of search engines and social network sites for background checks. For more information about ESR News or to send comments or questions, please email ESR News Editor Thomas Ahearn at tahearn@esrcheck.com. To subscribe to the ESR News Blog Feed, visit http://www.esrcheck.com/wordpress/feed/. To subscribe to the complimentary ESRcheck Report monthly newsletter, please visit http://www.esrcheck.com/Newsletter/.

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