Company to Pay $20 Million to Settle FTC FCRA Case Involving Credit Reports

Fair Credit Reporting Act (FCRA)

Written By ESR News Blog Editor Thomas Ahearn

A Utah-based smart home security and monitoring company has agreed to pay $20 million to settle charges filed by the Federal Trade Commission (FTC) that claimed the firm allegedly violated the Fair Credit Reporting Act (FCRA) by improperly obtaining credit reports in order to qualify potential customers for financing for its smart home monitoring and security products and services, according to a press release from the FTC.

Under the settlement, Vivint Smart Homes Inc. will pay a $15 million civil penalty and an additional $5 million to compensate injured consumers. In a complaint filed on behalf of the FTC by the U.S. Department of Justice (DOJ), the FTC also alleged that Vivint violated the FTC’s Red Flags Rule by failing to implement an identity theft prevention program, which is required of certain companies that regularly use or obtain credit reports.

“Vivint’s sales staff stole people’s personal information to approve others for loans. For misusing consumer credit reports and other sensitive data, and harming people’s credit, this company will pay $20 million,” Daniel Kaufman, Acting Director of the FTC’s Bureau of Consumer Protection, stated in the press release, which also explained in more detail how door-to-door sales representatives working for Vivint would improperly obtain credit reports.

In addition to the monetary judgment – the largest to date for an FTC FCRA case – Vivint must implement an employee monitoring and training program, implement an identity theft prevention program, establish a customer service task force to verify that accounts belong to the right customer, assist consumers who were improperly referred to debt collectors, and obtain assessments to ensure the company complies with the FCRA.

Enacted by Congress in 1970, the FCRA 15 U.S.C § 1681 promotes the accuracy, fairness, and privacy of consumer information contained in the files of Consumer Reporting Agencies (CRAs), protects consumers from the willful and/or negligent inclusion of inaccurate information in their consumer reports, and regulates the collection, dissemination, and use of consumer information, including consumer credit information.

Employment Screening Resources® (ESR) – a leading global background check provider that was named the number one background screening firm in 2020 by HRO Today – offers FCRA-compliant background screening solutions and white papers on how employers may avoid FCRA lawsuits and how CRAs may avoid FCRA lawsuits. To learn more about background check services from 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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