FTC: Data Brokers ARE Consumer Reporting Agencies Under The FCRA

In warning letters sent to ten data brokers the FTC warned that a data broker that assembles or evaluates information on consumers and provides it to help make decisions related to creditworthiness, eligibility for insurance, suitability for employment or other FCRA purposes then the data broker is considered a consumer reporting agency (CRA) and is required to comply with the FCRA. This is true even if the broker obtains the information from criminal background checks or other public records. Even if the broker places a disclaimer on their website indicating that data must not be used for creditworthiness, insurance eligibility, employment or other FCRA purposes, they may still be a CRA.

The FTC instructed data brokers that if they do NOT want to be considered a CRA they must:

  • Have clear policies in place explaining the purposes for which they will and will not sell information
  • Educate employees and customer service representatives about the importance of not selling consumer information for FCRA purposes
  • Review all marketing materials to ensure that they are not marketing products for purposes related to creditworthiness, eligibility for insurance, suitability for employment or other FCRA purposes

Requirements For Data Brokers Who Provide Information Used For Employment Purposes

The FTC warned data brokers that if they provide information used by employers for employment purposes they are CRAs and the FCRA requires that the broker:

  • Take reasonable steps to ensure the maximum possible accuracy of the information
  • Take reasonable steps to ensure that each employer is in fact using the report to screen employees
  • Obtain certification from employers that they provided clear written notice to the person whose report they are requesting and that they obtained that person’s written consent to procure the report
  • Inform employers who obtain consumer reports about employer obligations under the FCRA — for example, if employers deny employment on the basis of information provided by a CRA they must provide the applicant with notice of that fact, along with information about the applicant’s right to receive a free copy of his or her report from the CRA, and to dispute information that the applicant believes is inaccurate

If a data broker provides employers with public-record information that is likely to affect negatively a consumer’s ability to obtain employment (e.g., arrests, indictments, criminal convictions, tax liens, or outstanding judgments), the broker must directly notify the consumer that they are reporting the information to the employer and provide the consumer with the employer’s contact information OR they must maintain strict procedures designed to insure that the public-record information provided is complete and up to date.

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