Fair Credit Reporting Act (FCRA)

Written By ESR News Blog Editor Thomas Ahearn

On January 7, 2020, the Federal Trade Commission (FTC) – a U.S. government agency that promotes competition while protecting and educating consumers – announced that a California-based mortgage broker will pay $120,000 to settle allegations that it violated the federal Fair Credit Reporting Act (FCRA) by revealing personal information about consumers in response to negative reviews posted on the review website Yelp.

The complaint filed on behalf of the FTC by the U.S. Department of Justice claims that the mortgage broker and its sole owner responded to consumers posting negative reviews about them on Yelp by revealing their credit histories, debt-to-income ratios, taxes, health, sources of income, family relationships, and other information including several responses that revealed the first and last names of reviewers.

“Companies that use credit reports and scores have a legal obligation to keep that information confidential,” Andrew Smith, Director of the FTC’s Bureau of Consumer Protection, stated in a press release. “They should not disclose that information to third parties without a legitimate reason to do so, and they certainly should not post that information on the Internet to embarrass or punish consumers.”

The FTC claimed the mortgage broker also violated the FTC Act and the Gramm-Leach-Bliley Act for failing to implement and test an information security program. In addition to paying a $120,000 penalty for violating the FCRA, the mortgage broker is prohibited from misrepresenting their privacy and data security practices, misusing credit reports, and improperly disclosing personal information to third parties.

Under the settlement, the mortgage broker must also implement a comprehensive data security program designed to protect the personal information it collects and obtain third-party assessments of its information security program every two years. The company must designate a senior corporate manager responsible for overseeing the information security program to certify compliance with the order every year.

The FTC helps to enforce the FCRA. In December of 2019, the FTC and the Consumer Financial Protection Bureau (CFPB) – the other government agency that enforces the FCRA – co-hosted an Accuracy in Consumer Reporting Workshop that that examined issues affecting the accuracy and security of consumer reports. A video of the workshop is at https://ftc-workshop-accuracy-consumer-reporting.videoshowcase.net/.

Employment Screening Resources® (ESR) – a leading global background screening firm – is accredited by the Professional Background Screening Association (PBSA) and undergoes annual SOC 2 audits to ensure the privacy, security, and confidentiality of personal information used for consumer reports. ESR was also named a top screening firm by HRO Today Magazine. To learn more about ESR, visit www.esrcheck.com.

NOTE: Employment Screening Resources® (ESR) does not provide or offer legal services or legal advice of any kind or nature. Any information on this website is for educational purposes only.

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