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FTC Slams Data Brokers in Letter

Staff members of the Federal Trade Commission did some undercover work to find that at least 10 data brokers could be violating the Fair Credit Reporting Act, which aims to protect the privacy and other rights of consumers.The FTC sent letters to these companies after a “test-shopping operation” indicated they were willing to sell consumer information without abiding by FCRA requirements.

FTC staff members posed as individuals or representatives of companies seeking information about consumers “to make decisions related to their creditworthiness, eligibility for insurance or suitability for employment,” the agency said.Data brokering companies that collect, distribute or sell this information are considered consumer reporting agencies under the FCRA.

That means the companies must “reasonably verify the identities of their customers and make sure that these customers have a legitimate purpose for receiving the information,” the FTC said. This requirement ensures that the privacy of sensitive consumer report information is protected, such as credit histories and creditors.

Of the 45 companies contacted by FTC staff in the test-shopper operation, 10 appear to violate the FCRA, the agency said. The FTC issued the letters this week in conjunction with an international “privacy practice transparency” sweep by the Global Privacy Enforcement Network (GPEN).

The ten companies receiving the warning letters from the FTC include:

The FTC said the letters are “not an official notice by the Commission that any of the named companies is subject to the requirements of the FCRA, nor do the letters lay out any formal complaints against the companies.”

But they serve to remind the companies to evaluate their practices to determine whether they are consumer reporting agencies. If they are, then they must determine how to comply with that law.

Mustafa Khundmiri
Mustafa Khundmirihttp://www.pacedm2.wpengine.com
Mustafa Khundmiri is a staff writer for Performance Marketing Insider. He is also the co-founder of Foundora.com - a knowledge hub for entrepreneurs.

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