In what the Federal Trade Commission (“FTC”) touts as “the first Commission case to address the sale of Internet and social media data in the employment screening context,” Spokeo, an on-line data broker, has agreed to settle charges by the FTC that its practices violated the Fair Credit Reporting Act (“FCRA”). Signing a consent decree endorsed on June 19 in the U.S. District Court in Los Angeles, and without admitting any claims or their underlying facts, Spokeo agreed to pay a fine of $800,000 and submit to injunctive relief chiefly aimed at compliance with the FCRA in the future.

The Fair Credit Reporting Act

The FCRA was enacted more than 40 years ago to regulate the practices of credit reporting agencies to require accuracy and privacy in assembling personal information on consumers and reporting that information in so-called “consumer reports” to users of that data.1 The law was extensively amended in the 1990s to impose reporting and disclosure requirements for users of consumer reports and the consumer reporting agencies (“CRA”) that assemble and report the information reported. For employers, these mandates as a general matter imposed specific notice and authorization requirements on use of consumer reports which continue to apply, e.g., whenever an employer retains a third party to screen an applicant for employment or conduct a background check or an investigation of a current employee. The FCRA requires credit reporting agencies that obtain and assemble the information presented

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