Data Brokers Settle FTC Charges of FCRA Violations

Written By Thomas Ahearn

ESR News BlogTwo data brokers that sell public record information about consumers have agreed to settle Federal Trade Commission (FTC) charges that they violated the Fair Credit Reporting Act (FCRA) by allegedly providing reports about consumers to users such as prospective employers and landlords without taking reasonable steps to make sure that they were accurate or that their users had a permissible reason to have those reports. A press release from the FTC about the settlements is available at http://www.ftc.gov/news-events/press-releases/2014/04/two-data-brokers-settle-ftc-charges-they-sold-consumer-data.

According to the FTC’s complaints, the two data brokers – Instant Checkmate, Inc. and InfoTrack Information Services – provided background reports that they expected would be used for the purpose of determining eligibility for housing and employment and thus qualified and operated as Consumer Reporting Agencies (CRAs) under the law but failed to abide by the FCRA. The two companies have agreed to pay civil penalties in separate cases – $525,000 against Instant Checkmate and $1 million against InfoTrack and its owner – and will be prohibited from continuing their alleged illegal practices. The settlement of allegations is not an admission of wrongdoing.

“Consumers shouldn’t have to worry that they’ll be turned down for a job or an apartment because of false information in a consumer report,” Jessica Rich, Director of the FTC’s Bureau of Consumer Protection, stated in the press release. “Data brokers that operate as consumer reporting agencies have a responsibility to ensure the accuracy of the information they sell for decisions about whether to hire someone, extend them credit, rent them an apartment, or insure them.”

The FTC’s complaint against Instant Checkmate alleges they violated the FCRA by failing to maintain reasonable procedures to ensure that those using its reports had permissible purposes for accessing them; furnishing reports to users that it did not have reason to believe had permissible purposes to access them; failing to follow reasonable procedures to assure that its reports were as accurate as possible; and failing to provide FCRA-mandated “User Notices” outlining several important consumer protections. The FTC complaint against Instant Checkmate is available at http://www.ftc.gov/system/files/documents/cases/140409instantcheckmatecmpt.pdf.

The court order against Instant Checkmate prohibits the company from violating the FCRA by: furnishing consumer reports to anyone who does not have an FCRA-defined permissible purpose; failing to maintain reasonable procedures to limit the furnishing of reports to people with permissible purposes; failing to maintain reasonable procedures to assure the maximum possible accuracy of the reports; and failing to provide User Notices. The court order is available at http://www.ftc.gov/system/files/documents/cases/140409instantcheckmateorder.pdf.

The FTC’s complaint against InfoTrack and its owner alleges they violated the FCRA by failing to use reasonable procedures to assure maximum possible accuracy of consumer report information obtained from sex offender registry records; failing to provide FCRA-required notices; and failing to provide written notices to consumers of the fact that InfoTrack reported public record information to prospective employers, when that information was likely to adversely affect consumers’ ability to obtain employment. The FTC’s complaint is available at http://www.ftc.gov/system/files/documents/cases/140409infotrackcmpt.pdf.

The court order against InfoTrack and its owner requires the defendants to comply with the FCRA by: maintaining reasonable procedures to assure the maximum possible accuracy of consumer report information; providing required FCRA notices; and notifying consumers when InfoTrack has provided public record information about them that is likely to have an adverse effect upon their ability to obtain employment. The court order is available at http://www.ftc.gov/system/files/documents/cases/140409infotrackorder.pdf.

The Federal Trade Commission (FTC) works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. The FTC has a blog titled ‘Keep FCRA in the foreground when the subject is background screening’ that contains information for businesses related to the FCRA, and what they can to do avoid fraud and to comply with the FCRA. The blog is available at http://business.ftc.gov/blog/2014/03/keep-fcra-foreground-when-subject-background-screening.

Background screening and consumer reports are heavily regulated by litigation, regulation, and legislation. Legal compliance and accuracy are the two biggest issues that employers should be looking at when conducting background checks. The best way for businesses to find out if a screening company is conducting FCRA-compliant background checks is to ask if the screening company is accredited by the National Association of Professional Background Screeners (NAPBS®) for proving compliance with the Background Screening Agency Accreditation Program (BSAAP). To learn more, visit http://www.napbs.com/accreditation/index.cfm.

Employment Screening Resources® (ESR) – ‘The Background Check Authority®’ – is a nationwide background screening firm accredited by the NAPBS. For more information, visit http://www.esrcheck.com, call Toll Free 888.999.4474, or email sales@esrcheck.com.

About Employment Screening Resources® (ESR):

Employment Screening Resources® (ESR) – ‘The Background Check Authority®’– is a nationwide provider of background checks accredited by The National Association of Professional Background Screeners (NAPBS®). ESR Founder and CEO Attorney Lester Rosen wrote the book on background checks with “The Safe Hiring Manual” and is a frequent speaker for “ESR Speaks.” To learn more about ESR, visit http://www.esrcheck.com, call Toll Free 888.999.4474, or email sales@esrcheck.com.

About ESR News: 

The ESR News Blog provides employment screening background check information for employers, recruiters, and jobseekers. For more information about ESR News, please email ESR News Editor Thomas Ahearn at tahearn@esrcheck.com.