Two Data Brokers Settle FTC Charges That They Sold Consumer Data Without Complying With Protections Required Under the Fair Credit Reporting Act

Two data brokers have agreed to settle Federal Trade Commission charges that they violated the Fair Credit Reporting Act (FCRA) by providing reports about consumers to users such as prospective employers and landlords without taking reasonable steps to make sure that they were accurate, or without making sure their users had a permissible reason to have them.

In separate cases, the two companies – Instant Checkmate, Inc., and InfoTrack Information Services – have agreed to pay civil penalties and will be prohibited from continuing their alleged illegal practices.

Instant Checkmate and InfoTrack sell public record information about consumers. According to the FTC’s complaints, both companies operated as consumer reporting agencies under the law but failed to abide by the FCRA. The FTC charged, among other things, that in many instances InfoTrack provided inaccurate information suggesting that job applicants potentially were registered sex offenders, possibly causing employers to reject their job application. According to the complaint against Instant Checkmate, that company failed to require that users of its reports identify themselves or certify the purpose for which they were seeking consumers’ information.

“Consumers shouldn’t have to worry that they’ll be turned down for a job or an apartment because of false information in a consumer report,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “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.”

The court orders impose a fine of $525,000 against Instant Checkmate and $1 million against InfoTrack and its owner. All but $60,000 of the penalty imposed on InfoTrack and its owner are suspended, based on their inability to pay.

Instant Checkmate, Inc., headquartered in San Diego, California, runs InstantCheckmate.com, a website that allows users to search public records for information about anyone, including a person’s current and previous address, arrest and conviction records, and birth, marriage and divorce records. On its website and in online ads, Instant Checkmate marketed its service to landlords and employers. For example, the website enticed landlords to “check out tenants before they rent” and advertised that the website’s background checks “are especially useful when employers are seeking candidates that require high security or a position of trust.”

According to the FTC, by providing background reports that it expected would be used for the purpose of determining eligibility for housing and employment, Instant Checkmate qualifies as a “consumer reporting agency” and is subject to the FCRA. The complaint alleges that Instant Checkmate violated the FCRA by failing to maintain reasonable procedures to ensure that those using its reports had permissible purposes for accessing them; furnishing reports to users that it did not have reason to believe had permissible purposes to access them; failing to follow reasonable procedures to assure that its reports were as accurate as possible; and failing to provide FCRA-mandated “User Notices” outlining several important consumer protections.

The court order against Instant Checkmate prohibits the company from violating the FCRA by:

• furnishing consumer reports to anyone who does not have an FCRA-defined permissible purpose;
• failing to maintain reasonable procedures to limit the furnishing of reports to people with permissible purposes;
• failing to maintain reasonable procedures to assure the maximum possible accuracy of the reports; and
• failing to provide User Notices.

InfoTrack Information Services, Inc. Based in Deerfield, Illinois, InfoTrack provides background screening reports to hundreds of employers nationwide about prospective and current employees. The reports include driving records, employment and education history, and criminal records, including sex offender records.

According to the FTC’s complaint, InfoTrack and its owner, Steve Kaplan, violated the FCRA by failing to use reasonable procedures to assure maximum possible accuracy of consumer report information obtained from sex offender registry records; failing to provide FCRA-required notices; 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.

The court order against InfoTrack and Kaplan requires the defendants to comply with the FCRA by:

• maintaining reasonable procedures to assure the maximum possible accuracy of consumer report information;
• providing required FCRA notices; and
• notifying consumers when InfoTrack has provided public record information about them that is likely to have an adverse effect upon their ability to obtain employment.

Information for Consumers and Business

The FTC has new blogs containing information for consumers and businesses related to the FCRA, and what they can to do avoid fraud and to comply with the FCRA, respectively.

The Commission votes approving the referral of the complaints to the Department of Justice and consents in settlement of the court actions was 4-0. 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.

NOTE: The Commission authorizes the filing of a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. Consent decrees have the force of law when signed by the District Court judge.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.

(FTC File Nos. 122-3221 and 122-3092)