FTC Warns Marketers That Mobile Apps May Violate Fair Credit Reporting Act
February 15, 2012
February 16, 2012
The Federal Trade Commission (FTC) warned marketers of six mobile background-screening applications that they may be violating the Fair Credit Reporting Act (FCRA). The FTC warned the app 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 FCRA.
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 represent precisely the type of information that is typically used in employment and tenant screening.
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 defined as being 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 (CRAs). Therefore, mobile apps that supply such information may qualify as CRAs under the act. CRAs must take reasonable steps to ensure that 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 obligations under the FCRA. 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 letters, the agency has made no determination as to whether the companies are violating the FCRA, but it encourages them to review their apps and their policies and procedures to be sure they comply with the FCRA.
Questions? Contact the Compliance Hotline: 1.800.546.4465, firstname.lastname@example.org.