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.

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Photo of Mike Nonaka Mike Nonaka

Michael Nonaka is co-chair of the Financial Services Group and advises banks, financial services providers, fintech companies, and commercial companies on a broad range of compliance, enforcement, transactional, and legislative matters.

He specializes in providing advice relating to federal and state licensing and…

Michael Nonaka is co-chair of the Financial Services Group and advises banks, financial services providers, fintech companies, and commercial companies on a broad range of compliance, enforcement, transactional, and legislative matters.

He specializes in providing advice relating to federal and state licensing and applications matters for banks and other financial institutions, the development of partnerships and platforms to provide innovative financial products and services, and a broad range of compliance areas such as anti-money laundering, financial privacy, cybersecurity, and consumer protection. He also works closely with banks and their directors and senior leadership teams on sensitive supervisory and strategic matters.

Mike plays an active role in the firm’s Fintech Initiative and works with a number of banks, lending companies, money transmitters, payments firms, technology companies, and service providers on innovative technologies such as bitcoin and other cryptocurrencies, blockchain, big data, cloud computing, same day payments, and online lending. He has assisted numerous banks and fintech companies with the launch of innovative deposit and loan products, technology services, and cryptocurrency-related products and services.

Mike has advised a number of clients on compliance with TILA, ECOA, TISA, HMDA, FCRA, EFTA, GLBA, FDCPA, CRA, BSA, USA PATRIOT Act, FTC Act, Reg. K, Reg. O, Reg. W, Reg. Y, state money transmitter laws, state licensed lender laws, state unclaimed property laws, state prepaid access laws, and other federal and state laws and regulations.