Federal Trade Commission Staff Test-Shopping Data Brokers
In May, the Federal Trade Commission (FTC) sent warning letters to 10 of the 45 data broker companies following a test-shopping operation, warning that their practices could violate the Fair Credit Reporting Act (FCRA).
The test-shopping operation was performed by non-attorney FTC staff members posing as individuals or representatives of companies seeking information about consumers to make decisions related to their creditworthiness, eligibility for insurance or suitability for employment.
The ten companies receiving the warning letters from the FTC include:
• Two companies that appeared to offer “pre-screened” lists of consumers for use in making firm offers of credit: ConsumerBase and ResponseMakers;
• Two companies that appeared to offer consumer information for use in making insurance decisions: Brokers Data and US Data Corporation; and
• Six companies that appeared to offer consumer information for employment purposes: Crimcheck.com, 4Nannies, U.S. Information Search, People Search Now, Case Breakers, and USA People Search.
The letters warned that providing prescreened lists to third parties qualifies as acting as a consumer reporting agency (CRA), requiring steps to ensure fairness, accuracy, and confidentiality of the lists provided.
Although the FTC has not evaluated the companies’ practices to determine if there were violations, the FTC encouraged the companies to review their products and services, as well as policies, procedures, and employee training. Violations of the FCRA carry injunctive relief and/or monetary penalties of up to $3,500 per violation.
For more information, please contact Braden Perry at 913-871-5885 or via email [email protected], or online at www.kennyhertzperry.com.