FTC Announces Settlements with Data Brokers over Alleged FCRA Violations

The Federal Trade Commission recently announced two more settlements with data brokers for alleged violations of the Fair Credit Reporting Act (FCRA). The settlements with Instant Checkmate, Inc., InfoTrack Information Services, and InfoTrack’s owner, Steve Kaplan, highlight the FTC’s continued strategy of aggressive enforcement of the FCRA against data brokers. The settlements come less than three months after the FTC’s $3.5 million consent order with another data broker for alleged FCRA violations.

The two companies involved provide somewhat similar services. Instant Checkmate runs a website that allows users to search public records about anyone. The company marketed this service to landlords and employers, and the data sold included information such as arrest and conviction records as well as birth, marriage, and divorce records.

Similarly, InfoTrack provides background screening reports to employers nationwide about prospective and current employees. InfoTrack’s background reports include driving records, criminal and sex offender records, and employment and education history. The FTC considers both companies to be “consumer reporting agencies” because they provide background reports and information that they expected would be used to determine eligibility for housing and employment.

According to the FTC’s complaint, Instant Checkmate allegedly violated the FCRA by failing to maintain reasonable procedures to ensure that those using its reports had a permissible purpose for accessing them, failing to follow reasonable procedures to assure that its reports were as accurate as possible, and failing to provide the consumer protection disclosures required by the FCRA. The consent order requires Instant Checkmate to comply with the relevant FCRA furnisher and notice requirements and assesses a $525,000 fine.

The FTC’s complaint against InfoTrack and Mr. Kaplan alleges similar FCRA violations. The FTC alleged that InfoTrack failed to use reasonable procedures to ensure the maximum possible accuracy of consumer report information obtained from sex offender registry records, failed to provide notices and disclosures required by the FCRA, and failed to provide written notices to consumers disclosing that InfoTrack reported public record data to prospective employers when the reported data was likely to result in an adverse employment decision. In addition to prohibiting these practices and requiring FCRA compliance, the consent order imposes a $1 million civil penalty; however, all but $60,000 of the fine is suspended, based on the inability of InfoTrack and its owner to pay.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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