FTC Tells Data Brokers To Follow Consumer Protection Laws

In its latest move against data brokers, the Federal Trade Commission has warned 10 companies that they potentially violate federal consumer protection laws.

The FTC said Tuesday that it sent the companies letters recommending that they review their services, policies and employee-training procedures, with an eye toward determining whether their practices complied with the Fair Credit Reporting Act. That law requires reporting agencies to take steps aimed at ensuring the accuracy of background reports used for employment, housing and credit. The law also gives consumers the right to challenge information in those reports, and to learn who has accessed them.

The warnings came after an undercover operation that involved the FTC sending queries about consumers to 45 data brokers. The investigators said they were asking for information in order to make decisions about credit, insurance, or employment.

The FTC said Tuesday that 10 of the companies it contacted “appear to violate” the Fair Credit Reporting Act. That group includes ConsumerBase (which appears to offer information to credit card firms), Brokers Data and US Data Corporation (both of which seem to market data used to make insurance decisions), and, 4Nannies, U.S. Information Search, People Search Now, Case Breakers, and USA People Search (which appears to offers data used for employment purposes).

The letters, signed by FTC associate director Maneesha Mithal, didn't outright accuse the data brokers of violating the law. But Mithal warned that the FTC “reserves the right to take action ... based on past or future law violations.

These warnings aren't the first time the FTC has publicly called out data brokers. Last year, the FTC sent similar missives to three operators of three mobile apps -- Everify, InfoPay and Intelligator.

The FTC also filed charges last year against online data broker Spokeo for allegedly violating the Fair Credit Reporting Act by selling information about job applicants to prospective employers without first taking steps to ensure the information is accurate. Spokeo settled the case by agreeing to pay $800,000.

Last year, the FTC said in its privacy report that Congress should enact new laws that would impose additional regulations on data brokers -- which the report defined as companies that collect information about consumers in order to resell the data for identity verification, fraud prevention, marketing and other purposes.

The Interactive Advertising Bureau opposes that recommendation, arguing that the definition of data brokers put forward in the FTC's report is so sweeping that it could include most publishers, ad networks and analytics companies.

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