Fine Lines: Data Reselling or Consumer Reporting?

by Dentons

[author: ]

Last month’s U.S. Federal Trade Commission’s U.S.$800,000 settlement with Spokeo, Inc. concerns an issue that I have posted about before: When is a data broker a consumer or credit reporting agency? As discussed below, the quantum of potential exposure for violating Ontario law relating to consumer reporting may be lower than in the U.S.; however, data brokers should seek legal advice to ensure that they are compliant.

In the recent U.S. case involving Spokeo, Inc., the FTC alleged that the organization was a data broker which collected personal information about consumers from on-line and off-line sources and then created data profiles for consumers to which it sold access. The FTC also alleged that the organization failed to ensure that it was complying with the U.S. Fair Credit Reporting Act (FCRA). In particular, the FTC alleged that the organization did not ensure that (a) the information was used for the limited purposes permitted by the FCRA, (b) the information was accurate, and (c) users of the data understood that the they were required to notify a consumer if the user of the data took an adverse action against the consumer based on the data in the report.

Ontario (and other jurisdictions in Canada) have legislation that is similar to the FCRA. The Consumer Reporting Act (Ontario) prohibits any person from conducting or acting as a consumer reporting agency or as a personal information investigator unless registered with the Ontario Registrar of Consumer Reporting Agencies. The potential monetary liability in Ontario may be smaller than in the U.S., but it remains serious. Violating the Consumer Reporting Act is a provincial offence. Corporations may be subject to fines of up to Cdn. $100,000 and officers and directors of those corporations may be subject to fines of up to Cdn. $25,000 (or in extreme cases, jail terms of up to 1 year or fines and jail terms).

In Ontario, a “consumer reporting agency” is a person or organization who furnishes consumer reports for gain or profit or on a regular co-operative non-profit basis. “Consumer reports” are written, oral or other communication of credit information or personal information which may be used for limited purposes. Those purposes include:

  • the extension of credit to or the purchase or collection of a debt of the consumer to whom the information pertains;
  • in connection with the entering into or renewal of a tenancy agreement;
  • employment purposes;
  • underwriting of insurance involving the consumer; and
  • a business or credit transaction involving the consumer.

A “personal information investigator” is a person who gathers personal information for consumer reporting agencies.

Consumer reporting agencies are prohibited from providing information from their files unless they have reason to believe it will be used for purposes permitted by the Consumer Reporting Act. The Consumer Reporting Act also prohibits certain types of data from forming part of the consumer report, including among other things:

  • any credit information based on evidence that is not the best evidence reasonably available;
  • any unfavourable personal information unless it has made reasonable efforts to corroborate the evidence on which the personal information is based, and the lack of corroboration is noted with and accompanies the information;
  • information regarding any criminal charges against the consumer where the charges have been dismissed, set aside or withdrawn; and
  • information as to race, creed, colour, sex, ancestry, ethnic origin, or political affiliation.

Like the FCRA, the Consumer Reporting Act requires disclosure to a consumer if a benefit is denied or a charge to a consumer is increased because of information from a consumer reporting agency. Consumers have the right to obtain access to their consumer reports.

Depending on its target market, a data broker may cross the line into consumer reporting. Organizations that are in the business of providing identity verification or background checking services or who gather data for those purposes should be particularly careful to seek legal advice to determine whether their business model has crossed the line into consumer reporting.


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.

© Dentons | Attorney Advertising

Written by:


Dentons on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.