The Federal Trade Commission recently announced two more settlements with data brokers for alleged violations of the Fair Credit Reporting Act (FCRA). The settlements with Instant Checkmate, Inc., InfoTrack Information Services, and InfoTrack’s owner, Steve Kaplan, highlight the FTC’s continued strategy of aggressive enforcement of the FCRA against data brokers. The settlements come less than three months after the FTC’s $3.5 million consent order with another data broker for alleged FCRA violations.

The two companies involved provide somewhat similar services. Instant Checkmate runs a website that allows users to search public records about anyone. The company marketed this service to landlords and employers, and the data sold included information such as arrest and conviction records as well as birth, marriage, and divorce records.

Similarly, InfoTrack provides background screening reports to employers nationwide about prospective and current employees. InfoTrack’s background reports include driving records, criminal and sex offender records, and employment and education history. The FTC considers both companies to be “consumer reporting agencies” because they provide background reports and information that they expected would be used to determine eligibility for housing and employment.

According to the FTC’s complaint, Instant Checkmate allegedly violated the FCRA by failing to maintain reasonable procedures to ensure that those using its reports had a permissible purpose for accessing them, failing to follow reasonable procedures to assure that its reports were as accurate as possible, and failing to provide the consumer protection disclosures required by the FCRA. The consent order requires Instant Checkmate to comply with the relevant FCRA furnisher and notice requirements and assesses a $525,000 fine.

The FTC’s complaint against InfoTrack and Mr. Kaplan alleges similar FCRA violations. The FTC alleged that InfoTrack failed to use reasonable procedures to ensure the maximum possible accuracy of consumer report information obtained from sex offender registry records, failed to provide notices and disclosures required by the FCRA, and failed to provide written notices to consumers disclosing that InfoTrack reported public record data to prospective employers when the reported data was likely to result in an adverse employment decision. In addition to prohibiting these practices and requiring FCRA compliance, the consent order imposes a $1 million civil penalty; however, all but $60,000 of the fine is suspended, based on the inability of InfoTrack and its owner to pay.

Attorneys in Ballard Spahr’s Consumer Financial Services and Privacy and Data Security Groups regularly advise clients on FCRA compliance and defend clients in FCRA lawsuits. The Consumer Financial Services Group is nationally recognized for its guidance in structuring and documenting new consumer financial services products, its experience with the full range of federal and state consumer credit laws, and its skill in litigation defense and avoidance (including pioneering work in pre-dispute arbitration programs).

The Privacy and Data Security Group includes experienced lawyers who help clients navigate the many laws designed to safeguard health, financial, and other private information; counsel clients on compliance, data mining, online marketing, and mobile privacy; and assist clients in responding to security breaches.

For more information, please contact CFS Practice Leader Alan S. Kaplinsky at 215.864.8544 or, John L. Culhane, Jr., at 215.864.8535 or, or Sarah T. Reise at 678.420.9370 or 

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