FTC Warns Background Check Services


This week the Federal Trade Commission warned several prominent online background check services that they may be in violation of the Fair Credit Reporting Act.

The FTC mailed official letters to 10 background check companies warning them of the potential problem with the information they provide to employers and creditors. Several sites were warned that the data they sell could be used to deny people jobs, housing or insurance.

Federal laws require that data providers that sell personal and public record information to employers, landlords, insurerance companies and financial institutions take steps to insure the accuracy of their information and notify anyone who is the subject of a background check. Personal data providers also may need to be sure that the person buying the information has a legitimate business reason for obtaining it.

Data brokers who do not insure the accuracy of the personal information they sell need to make clear that its background checks or contact information may include omissions or inaccuracies and can only be used for marketing or entertainment reasons.

The Federal Trade Commission’s main concern is that data brokers are collecting and reselling personal information that may be out-of-date or false.

These latest warning letters from the FTC are part of an effort to control the impact of data companies that collect and sell large amounts of personal data to other people and businesses. In December 2012, the Federal Trade Commission ordered several data dealers, to show what information they collect on people and how this information is used.

During a recent informal investigation into the personal data business, FTC employees probed 45 business that offer personal information reports. Most of the companies were called and questioned by FTC workers by phone and that in each case there was evidence that the company might be violating the FCRA.

One company that received a warning letter from the FTC provides consumer information that could be used to deny a person insurance. And another company among the ten that were warned appears to offer lists of people who meet a certain income and financial levels to creditors who make pre-approved loan offers.

If the Federal Trade Commission discovers that these businesses do not change their practices, or if complaints are filed against the companies, the FTC could launch formal investigations and impose fines against the companies as they have done in the past with one high profile people search and public records site.