'Data Broker' to Pay $800,000 in FTC Settlement

Today the Federal Trade Commission (FTC) announced an $800,000 settlement with a company that operates as a “data broker”. The Company’s services include collecting personal information from sources both online and offline – including social networks – and merging that information to create profiles of consumers. These services were marketed to HR professionals, recruiters and others as an employment screening tool. According to the FTC’s press release, this is the “first Commission case to address the sale of Internet and social media data in the employment screening context.”

The FTC alleged the Company operated as a Consumer Reporting Agency and violated provisions of the Federal Fair Credit Reporting Act (FCRA) by:

  • Failing to make sure that the information it sold would be used only for legally permissible purposes;
  • Failing to ensure the information was accurate; and
  • Failing to tell users of its consumer reports about their obligation under the FCRA, including the requirement to notify consumers if the user took an adverse action against the consumer based on information contained in the consumer report.
In addition to the FCRA violations, the FTC claimed the Company also employed deceptive advertising techniques by posting “endorsements” of their services that were actually created by the Company’s employees – not independent customers as claimed – which violated the Federal Trade Commission Act.

As the use of consumer reports and information such as criminal history become more heavily scrutinized and regulated, it is important to partner with a reputable consumer reporting agency that complies with and helps employers comply with local, state, federal and international law. Verifications, Inc. ensures that the background information we provide to you contains only that information which can be considered in an employment decision. For more information, contact us at (866) 455-0779, e-mail or complete our contact form.