Archive for 'fcra'

Federal Trade Commission Settles with Equifax Over Selling Consumer Information

Thursday, October 18th, 2012 at 12:42 pm  
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The credit bureau Equifax agreed to settle charges brought by the Federal Trade Commission that the company improperly sold private consumer information. According to the FTC press release, Equifax was accused of selling information about consumers who were late on their mortgage payments. These “prescreened” lists of consumers were sold to Direct Lending Source, Inc., which in turn sold some of these same lists to companies who used the information to sell debt relief services and loan modification plans to consumers. The Fair Credit Reporting Act (FCRA) says that it is illegal to share a prescreened list for general marketing purposes, and is only allowed for “firm offers of credit or insurance.”

The FTC alleged that the prescreened lists included the names and contact information for millions of consumers, along with their credit scores and information about how tardy their mortgage payments were. The agency said that, by failing to control access to sensitive consumer information, Equifax was in violation of the FCRA. The FTC says that Direct Lending and its affiliates allegedly violated the FCRA and FTC Act by – among other things – obtaining the prescreened lists, reselling those lists without telling Equifax about the end users, and failing to control access to consumer financial information.

Equifax and Direct Lending have agreed to a proposed settlement. Terms of the Equifax settlement include payment of $393,000 and prohibitions regarding selling prescreened lists. Terms of the Direct Lending settlement include a $1.2 million civil penalty and prohibitions regarding using consumer reports without a permissible purpose.

Federal Trade Commission Settles with Spokeo Over FCRA Charges

Thursday, June 14th, 2012 at 5:00 am  
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The Federal Trade Commission has reached an $800,000 settlement with Spokeo, Inc. after the FTC charged that the company violated the Fair Credit Reporting Act. In a first-of-its-kind case, the FTC charged that Spokeo operated as a consumer reporting agency when it collected Internet and social media data and then marketed that data to those in the human resources, background screening, and recruiting industries.

The company’s alleged violations included not ensuring that the information sold would be used for legal purposes; not ensuring the accuracy of the information; and not informing their customers about their obligations under the Fair Credit Reporting Act.

While it’s common knowledge that we each leave a digital footprint as we traverse the Web, it’s unnerving to how that information is mined and sold. According to the FTC’s press release, “Spokeo collects personal information about consumers from hundreds of online and offline data sources, including social networks. It merges the data to create detailed personal profiles of consumers. The profiles contain such information as name, address, age range, and email address. They also might include hobbies, ethnicity, religion, participation on social networking sites, and photos.”

FCRA Privacy Provisions Under Attack

Friday, May 11th, 2012 at 4:54 pm  
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The Fair Credit Reporting Act was designed to ensure the accuracy of information in consumers’ credit reports and to protect consumer privacy. A case currently before the U.S. District Court for the Eastern District of Pennsylvania calls into question the constitutionality of the FCRA’s provision that prohibits the disclosure of arrest records or other negative information that is more than seven years old. According to a Federal Trade Commission press release, the FTC, along with the Consumer Financial Protection Bureau and the Department of Justice, have filed a brief in support of the provision’s constitutionality.

The defendant in King v. General Information Services is arguing that those privacy provisions are an unconstitutional restriction of commercial free speech. The FTC is arguing that the provision “directly advances the substantial government interest in protecting individuals’ privacy and is no more extensive than necessary to serve that interest.”

FTC Proposes $1.8 Million Teletrack Settlement

Friday, July 8th, 2011 at 5:00 am  
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The Federal Trade Commission has reached a $1.8 million settlement with Teletrack, Inc., for alleged violations of the Fair Credit Reporting Act (FCRA). According to a press release issued by the FTC, the company sells consumer credit reports to businesses that typically extend loans to financially distressed consumers. Where the Teletrack crossed the line, though, was when it sold information in its database to marketers who wanted to target this demographic. According to the FTC, Teletrack’s “marketing lists” were “credit reports under the FCRA because they contained information about a consumer’s creditworthiness.”

Bureau of Consumer Protection Director David Vladeck noted, “The FCRA says a credit reporting agency like Teletrack can’t sell a consumer’s sensitive credit report information for mere sales pitches.”

The proposed settlement is subject to court approval.

Supreme Court Lets Fair Credit Reporting Act Decision Stand

Tuesday, January 18th, 2011 at 6:53 pm  
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Last week, the U.S. Supreme Court denied an appeal by the credit reporting agency Experian, which was seeking to overturn the Ninth Circuit Court of Appeals’ decision in Pintos v. Pacific Creditors.

According to ACA International, the lower court ruled in favor of a consumer whose credit report was accessed by a debt collector who wanted to collect a deficiency balance for towing and impounding charges after the consumer’s car was impounded and sold. The Ninth Circuit ruled that the debt collector improperly obtained the consumer’s credit report, and that the credit reporting agency improperly furnished the report, thus violating the Fair Credit Reporting Act (FCRA).

The court said that two conditions must be met in order for a credit report to be accessed. First, the credit transaction needs to involve the consumer. Second, the transaction has to involve credit extension, credit review, or account collection. In this case, the towing and impounding charges were not part of a credit transaction.