Spokeo pays $800K to Settle Charges of Alleged FCRA Violations

Published On June 19, 2012 | By Lisa Branco | Litigation, Privacy
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Last week, the FTC announced that Spokeo, Inc., a data broker that sells information profiles on consumers, had agreed to pay $800,000 to settle charges that it (a) violated certain provisions of the Fair Credit Reporting Act (“FCRA”); and (b) deceptively claimed that endorsements of its service posted on websites and blogs were independent when they were actually created by Spokeo employees.  The proposed consent decree and order also bars Spokeo from further violations of FCRA or from making deceptive representations about its endorsements.

The FTC’s complaint alleged that Spokeo collected personal information about consumers from numerous data sources on- and offline, and then merged the data to create detailed profiles of consumers.  Spokeo then marketed subscriptions to its profiles to HR professionals, recruiters, and others for employment screening purposes.  In marketing these profiles, the FTC alleged, Spokeo violated FCRA by failing to: (a) verify the recipients of the profiles and ensure the profile information would be used for a “permissible purpose” under FCRA; (b) have procedures in place to ensure accuracy of consumer reporting information; and (c) give notice about obligations under FCRA to any person buying its consumer profiles.

The case is a reminder that anyone seeking to use consumer reports for employment purposes should take care to obtain such reports from data brokers compliant with the FCRA provisions governing consumer reporting agencies and to comply with the FCRA requirements governing the use of consumer reports.

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