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Inside Privacy Updates on Developments in Global Privacy & Data Security from Covington & Burling LLP

FTC Raises Fair Credit Reporting Act Concerns with Background Screening Application Marketers

Posted in Federal Trade Commission, Financial Privacy, Mobile, United States

On February 7, 2012, the Federal Trade Commission sent letters to six marketers of mobile applications that provide background screening services.  The applications, including “Police Records,” “Criminal Pages,” and “Locate Anyone,” provide criminal record histories that, if used for employment or other Fair Credit Reporting Act (FCRA)-related purposes, may subject the marketers to treatment as a “consumer reporting agency” for purposes of the FCRA.

A consumer reporting agency is a company that assembles or evaluates information relating to consumers for the purpose of furnishing “consumer reports” to third-parties.  Consumer reports include information that relates to an individual’s character, reputation or personal characteristics and are used or expected to be used for employment, housing, credit, or other similar purposes.  It follows that if a company provides criminal background information to employers about prospective or current employees, the company is a consumer reporting agency because the information pertains to the employees’ character, reputation, or personal characteristics.  The definitions in the FCRA are broad and may encompass many companies that are unaware their services fall within the scope of the statute.

The FTC’s letters do not take a position with respect to the marketers’ applications but encourage the marketers to review their applications and policies and procedures in light of the FCRA.