Two Minnesota companies have agreed to take steps to ensure the accuracy of their reports in order to settle charges that their mobile background-check apps violated federal consumer protection laws.
Filiquarian Publishing allegedly sold apps for 99 cents that allowed consumers to run criminal background checks on other people, the Federal Trade Commission alleges in a complaint made public last week. A related company, Choice Level, allegedly furnished the criminal records. Between 2010 and last May, Filiquarian allegedly sold nearly 7,000 copies of the background-check apps on iTunes and GooglePlay.
The FTC charged Filiquarian and Choice Level with violating the federal Fair Credit Reporting Act, which sets out procedures for companies that supply reports for employment, insurance, housing and credit applications. The law says that credit reporting agencies must take steps to ensure the accuracy of their report, and provides that consumers have the right to challenge information in reports.
The law also prohibits credit reporting bureaus from furnishing data unless the recipients intend to use it to make decisions about specific matters -- including housing, employment and credit applications.
Filiquarian and Choice Level "did not comply with" that law, the FTC alleges. The companies "regularly" provided reports without first finding out whether the recipients had a legitimate purpose. They also allegedly failed to vet their reports for accuracy. Both companies were owned by Joshua Linsk, according to the FTC's complaint.
The companies, which did not admit wrongdoing, agreed that they will not provide consumer reports unless recipients intend to use the information to assess applications for housing, employment, credit or other specific purposes.
The companies also agreed that they will "maintain reasonable procedures to assure the maximum possible accuracy" of information.
The charges against Filiquarian and Choice Level come about one year after the FTC warned data brokers that their mobile apps must comply with the federal Fair Credit Reporting Act -- even when their Web sites have disclaimers saying that the reports shouldn't be used for decisions about housing, employment or credit.
Last year, the FTC settled with Web company Spokeo, which agreed to pay $800,000 to resolve charges that it violated the Fair Credit Reporting Act by selling information about job applicants to prospective employers without first taking steps to ensure the information is accurate.