FTC “Mystery Shopper” Sting Results in Warnings to Consumer Data Brokers for Possible FCRA Violations

FCT Warning Letters Issued to Ten Companies

May 7, 2013 Washington D.C. – The Federal  Trade Commission announced it sent letters to ten data broker companies warning the companies’ practices could violate the Fair Credit Reporting Act (FCRA) after a test-shopping  operation by the FTC indicated the companies 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.

Data broker companies that collect,  distribute or sell this information are considered consumer  reporting agencies under the FCRA, meaning they must reasonably verify  the identities of their customers and make sure that these customers have a  legitimate purpose for receiving the information. This requirement ensures that  the privacy of sensitive consumer report information is protected. Of the 45  companies contacted by FTC staff in the test-shopper operation, ten appear to  violate the FCRA by offering to provide the information without complying with  the law’s requirements.

The FTC issued the letters this week  in conjunction with an international privacy practice transparency sweep conducted  by the Global Privacy Enforcement Network (GPEN). The network connects privacy  enforcement authorities to promote and support cooperation in cross-border  enforcement of laws protecting privacy. Several GPEN members from countries  around the world are taking steps this week to ensure that companies meet their  obligations related to the privacy of consumers’ personal information.

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

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. Instead, they serve to remind the companies to evaluate  their practices to determine whether they are consumer reporting agencies, and  if so, how to comply with that law.

Read Original FTC Release here


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