Employers must tread carefully when considering the use of background checks provided by a mobile phone application now that the Federal Trade Commission has issued warning letters to three makers of such apps that they may violate the Fair Credit Report Act if used for certain purposes, including employment screening.

The FTC issued nearly identical letters to three companies—Everify, Inc., InfoPay Inc., and Intelligator Inc.—that pointedly instructed “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 said the FTC has concerns that some of the apps that include criminal record histories are issuing the type of character and general reputation information to be used by employers during employee screening. Significantly, if the apps are subject to the FCRA, the consumer reporting agencies must, before dissemination, scrutinize the information compiled to protect the individual’s privacy and ensure the accuracy of the information.

The FCRA requires consumer reporting agencies to inform employers of the obligation to provide notice to employees and applicants if any adverse action is taken because of information learned from a consumer report.

The FTC has not made a determination as to whether any of the six mobile apps—Police Records; Criminal Pages; Background Checks; Criminal Records Search; Investigate and Locate Anyone; and People Search and Investigator—are violative of the FCRA. But the letters encouraged each of the companies to take a closer look at their apps, as well as their polices and procedures, to ensure compliance with the FCRA.

The FTC’s letters, although not an official determination, demonstrate that employers must take a second look at the genesis of the consumer reports being relied upon before making any affirmative employment decisions. Our Labor and Employment attorneys routinely advise employers across the country on ways to avoid liability while conducting background checks on applicants and existing employees. If you have questions, please contact John G. Kerkorian at 602.798.5408 or kerkorianj@ballardspahr.com, or the lawyer in Ballard Spahr’s Labor and Employment Group with whom you work. 


Copyright © 2012 by Ballard Spahr LLP.
(No claim to original U.S. government material.)


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