The Federal Trade Commission (FTC) today put the marketers of six mobile applications on notice today that their background screening apps may be violating the Fair Credit Reporting Act.
The FTC warned the apps marketers that, if they have reason to believe the background reports they provide are being used for employment screening, housing, credit, or other similar purposes, they must comply with the Act.
The companies that received the letters are Everify, Inc., marketer of the Police Records app, InfoPay, Inc., marketer of the Criminal Pages app, and Intelligator, Inc., marketer of Background Checks, Criminal Records Search, Investigate and Locate Anyone, and People Search and Investigator apps.
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.
“If you have reason to believe that your background reports are being used for employment or other FCRA purposes, you and your customers who are using your reports for such purposes must comply with the FCRA,” the letters say.
The FCRA is designed to protect the privacy of consumer report information and ensure that the information supplied by consumer reporting agencies is accurate. Consumer reports are communications that include information on an individual’s character, reputation, or personal characteristics and are used or expected to be used for purposes such as employment, housing or credit.
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;
- provide users of its reports with information about their obligations under the FCRA.
- In the case of consumer reports provided for employment purposes, 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 letters, the agency 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.
For more information, see http://www.ftc.gov/opa/2012/02/mobileapps.shtm
The FTC’s steps in protecting consumers on this issue is encouraging, particularly because they bring to the forefront the requirement that these application companies have to inform employers of their obligation to provide notice to employees and applicants of any adverse action taken on the basis of a consumer report.
In today’s world where consumers have little to no insight into the information collected and shared about them this requirement of notification is absolutely critical. It may be the only way you ever discover that the information about you is false and damaging.
We need the FTC to take this further
Consumers need a guaranteed right to see any information collected, stored or held about them. We need a straightforward mechanism to correct any information errors. And we need the protection in place that any information under dispute not be shared with 3rd parties until the dispute is resolved.
Consumers should also have the right to ‘opt out’ of the collection of their information by these companies. Companies that share, sell, rent, or in any way distribute consumer information should be required to send an annual notice to every consumer in their databases informing them of the collection, providing links to view and correct/dispute information, and how to opt out if they so choose.
Until these rights and requirements are in place, consumers will continue to be exploited.