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FTC hits up 9 data brokers for info on how they collect and use private data

Michael Cooney | Dec. 19, 2012
The Federal Trade Commission today said it orders to nine data brokerage companies to report how they collect and use data about consumers.

In response to the FTC action, Spokeo issued a statement that in part read: "It has never been our intention to act as a consumer reporting agency. We have made changes to our site and our internal business practices in order to ensure we don't infringe upon the FCRA's important consumer protections, and to ensure an honest and transparent service that will continue to be easy for our customers to use. We are a technology company organizing people-related data in innovative ways. We do not create our own content, we do not possess or have access to private financial information, and we do not offer consumer reports. Our agreement with the FTC will allow for a continued open dialogue regarding our business practices. We are eager to help shape the future of online information sharing. As we continue to provide new innovations within the people search industry, we are committed to making clarity and transparency top priorities for our customers."

Aside from the Spokeo action, the FTC earlier this year sent letters to six unidentified mobile applications makers warning them that their background screening apps may be violating federal statutes. Specifically the FTC said if the app makers have reason to believe their background reporting apps are being used for employment screening, housing, credit or other similar purposes, they must comply with the Fair Credit Reporting Act which is supposed to protect consumer privacy and ensure that the information supplied by consumer reporting agencies is accurate.

According to the FTC, some of the apps include criminal record histories, which bear on an individual's character and general reputation and are precisely the type of information that is typically used in employment and tenant screening.

Under the FCRA, operations that assemble or evaluate information to provide to third parties qualify as consumer reporting agencies, or CRAs. Mobile apps that supply such information may qualify as CRAs under the act. CRAs must take reasonable steps to ensure the user of each report has a "permissible purpose" to use the report; take reasonable steps to ensure the maximum possible accuracy of the information conveyed in its reports; and provide users of its reports with information about their FCRA obligations. In the case of consumer reports provided for employment purposes, for example, CRAs must provide employers with information regarding their obligation to provide notice to employees and applicants of any adverse action taken on the basis of a consumer report.

According to the warning letters, the FTC has made no determination whether the companies are violating the FCRA, but encourages them to review their apps and their policies and procedures to be sure they comply with the FCRA. Future actions against those firms weren't ruled out if violations are found.

 

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