The Federal Trade Commission has
closed its investigation into whether the company Social Intelligence violates federal credit reporting laws without commencing an enforcement action. But the FTC also said the company, which scours
the Web for information about job candidates, is a consumer reporting agency and must follow fair credit laws.
"No further action is warranted at this time," Maneesha Mithal, associate
director of the FTC's Division of Privacy and Identity Protection, said in a letter to Social
Intelligence's law firm Nixon Peabody. "In reaching this determination, we considered information provided by Social Intelligence about its policies and procedures for compliance with the FCRA
[Federal Credit Reporting Act]."
The letter, quietly issued last month, drew attention on Monday when privacy researcher and former FTC staffer Chris Soghoian publicized it on Twitter.
Social Intelligence, which launched last September, says that it only reports on "employer-defined objectionable material, such as racist remarks or behavior, explicit photos and video, and illegal
activity." The company also says it considers itself a consumer reporting agency, and complies with federal consumer protection laws.
Geoff Andrews, COO of Social Intelligence, says the company
requires employers to obtain authorization from job applicants prior to running any social media checks on them. Social Intelligence also requires employers to notify applicants of any adverse
decision and offer a dispute resolution process.
Andrews says the company decided to do so out of a recognition that it was dealing with potentially sensitive information. "The Federal Credit
Reporting Act doesn't really contemplate the Internet, much less social media," he says. "We recognized on day one that what we're doing is new and, frankly, we wanted to take all the steps we thought
were necessary."
Andrews says his company hired two law firms -- Nixon Peabody and Seyfarth Shaw -- to help it research the federal fair credit reporting law and figure out how to comply with it.
He said that lawyers for the company also reached out to the FTC to solicit input.
Although the FTC closed its investigation, Mithal said in her letter that Social Intelligence is a reporting
agency "because it assembles or evaluates consumer report information that is furnished to third parties that use such information as a factor in establishing a consumer's eligibility for employment."
That stance could be critical for data brokers like Spokeo, which maintains it isn't a reporting agency. Spokeo says it's a search engine, and therefore, is not subject to the requirements of the
federal consumer reporting laws.
Spokeo's processes appear automated, while Social Intelligence's also involve a layer of human review. But whether that factor will make a difference to the FTC
remains to be seen.
Last year, the Center for Democracy & Technology asked the FTC to
investigate Spokeo for allegedly violating the statute by selling information about consumers' finances without giving them the opportunity to access the underlying data or learn who has requested
their profiles. That complaint is still pending.
Spokeo also faces two lawsuits by consumers who allege that the company violated the federal law by selling information about them.