Two companies have agreed to settle Federal Trade Commission (FTC) charges that they violated the Fair Credit Reporting Act (FCRA) as consumer reporting agencies.  The FTC alleged that Instant Checkmate, Inc. and InfoTrack Information Services (InfoTrack) violated the FCRA by providing reports to employers and landlords without taking reasonable steps to make sure that they were accurate and without making sure their users had a permissible purpose to have them.  Both companies have agreed to pay civil penalties — $525,000 against Instant Checkmate and $1 million against InfoTrack and its owner (due to their inability to pay, all but $60,000 of the penalty imposed is suspended against InfoTrack and its owner).

Instant Checkmate offered an online service allowing consumers to request background reports which it obtained from public records and which were used to determine eligibility for employment or housing.  InfoTrack sold reports for employment screening purposes. In a statement by Jessica Rich, Director of the FTC’s Bureau of Consumer Protection, she stated, “Data brokers that operate as consumer reporting agencies have a responsibility to ensure the accuracy of the information they sell for decisions about whether to hire someone, extend them credit, rent them an apartment, or insure them.”

Allegations against Instant Checkmate for FCRA violations include:

  • Failing to maintain reasonable procedures to ensure that those using its reports had permissible purposes for accessing them — FCRA § 607(a);
  • Furnishing reports to users that it did not have reason to believe had permissible purposes to access them — FCRA § 604;
  • Failing to follow reasonable procedures to assure that its reports were as accurate as possible — FCRA § 607(b); and,
  • Failing to provide FCRA-mandated user notices — FCRA § 607(d).

Disclaimer Language – Instant Checkmate included disclaimers on its website stating that it was not a consumer reporting agency for purposes of the FCRA and that individuals could not use the company’s background reports for FCRA purposes. Anyone who follows my blog knows what I have to say about that.  Such disclaimers are meaningless in the eyes of the FTC and in fact, likely only to encourage the FTC to further scrutinize the website.

Allegations against InfoTrack for FCRA violations include:

  • Failing to use reasonable procedures to assure maximum possible accuracy of consumer report information obtained from sex offender registry records – FCRA § 607(b);
  • Failing to provide FCRA-required notices to users and furnishers – FCRA § 607(d); and,
  • Failing to provide written notices to consumers of the fact that InfoTrack reported public record information to prospective employers, when that information was likely to adversely affect consumers’ ability to obtain employment – FCRA § 613(a)(1) and (a)(2).

Searches and Identifiers – With respect to accuracy of the reports provided to employers, InfoTrack allegedly searched the National Sex Offender Registry using name and date of birth, however, there were instances in which they would report “possible matches” to employers based on name-only searches. The FTC alleged that their practices and procedures resulted in furnishing reports with this information for individuals that could not have been the subject of the inquiry (see page 5 of the Complaint).

The complaints and proposed consent orders were filed in the following courts: 1) Instant Checkmate: U.S. District Court for the Southern District of California; 2) InfoTrack Information Services: U.S. District Court for the Northern District of Illinois. The proposed consent decrees are subject to court approval.