The Federal Trade Commission (FTC) and Consumer Financial Protection Bureau (CFPB) have recently filed a joint amicus brief. In it, they urged the U.S. Court of Appeals for the Second Circuit to overturn a New York federal district court decision. 

The FCRA Case

The two federal agencies claimed the lower court’s recent decision overlooked a Fair Credit Reporting Act (FCRA) requirement. According to the agencies, the FCRA requires information furnishers to delete information in cases that cannot verify the data’s accuracy. The case’s underlying issues began when the plaintiff filed a dispute with the three largest consumer reporting agencies (CRAs).

The plaintiff expressed concerns regarding credit accounts made under her name. According to the plaintiff, her mother had opened multiple credit accounts in her name without permission. She discovered these accounts after an apartment complex denied her application for a lease. She filed disputes concerning these accounts with the three CRAs, who forwarded the cases to the issuing banks.

The Defendant’s Investigations

In response to the dispute, one bank proceeded to investigate its files. It sought to confirm whether the information on file matched those provided by the plaintiff. In addition, the bank referenced a public database to verify whether the address and telephone number linked to the account matched the plaintiff’s name. The bank found everything matched.

Due to this, the bank reported the plaintiff as the account holder responsible for the credit card debt. In response, the plaintiff filed a lawsuit against the bank alleging violations of the FCRA, specifically Section 1681s-2(b)(1), which requires data furnishers to conduct a reasonable investigation of the dispute and take appropriate action.

The plaintiff argued that the bank took no additional steps to prove fraudulent accounts. However, the district court found that the plaintiff’s argument held no facts to prove the bank would come to another conclusion. Furthermore, the court found that the FCRA does not require a furnisher to rely on a consumer’s allegations without other evidence. Due to the lack of evidence that a reasonable investigation could uncover such evidence, the court granted summary judgment to the defendant.

The FTC’s and CFPB’s Rebuttal

However, the FTC and CFPB’s amicus brief argue that the Second Circuit should reverse this ruling. The federal agencies’ argument centers upon its interpretation of Section 1681s-2(b)(1)(E). This section requires that “when disputed information ‘is found to be inaccurate or incomplete or cannot be verified,’ the furnisher must, ‘as appropriate,’ delete, modify, or permanently cease reporting the disputed information.”

According to the deferral agencies, the district court failed to consider that the defendant had not suitably verified the information. They found this was the case even though the bank could not determine any definitive evidence of fraud. As a result, the agencies claim that it may have been appropriate to cease reporting the information in the absence of a definitive verification.

The Second Circuit has yet to rule on the merits of this argument. Regardless, this case illustrates the importance of accurate consumer reporting. This reminder is particularly true for consumer reports used in employment screening. The best way to ensure the accuracy of these reports is to partner with a trusted background check provider.

Discover the benefits of JDP’s seamless background checks for your business. Contact a sales rep today.

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The Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) recently took action against a rental screening company. This company is a subsidiary of a major consumer reporting agency (CRA) and allegedly violated the Fair Credit Reporting Act (FCRA). According to the suit, the company failed to ensure the accuracy of rental background checks provided to landlords.

Furthermore, the rental screening company kept the identity of the third parties from renters. These third parties allegedly provided inaccurate information, harming the renters’ opportunities and image. The FTC and CFPB have requested a federal court to have the CRA pay $15 million to cover the FCRA violations. They also asked for improvements to how the CRA reports evictions.

Complaint Details

The joint complaint explained that the rental screening company repeatedly failed to ensure they delivered up-to-date reports. Failing this, the CRA revealed it did not use recent public records, missing dismissed evictions. As such, it reported several entries for the same eviction case and included sealed records.

Furthermore, the rental screening company refused to disclose who provided the inaccurate information. Instead, it claimed the criminal or eviction records came from the jurisdictions where the proceedings occurred. If true, the affected individuals had to contact third-party vendors to correct this inaccurate information. However, the company failed to share this information with the renters.

The CRA must pay $8 million for falsely informing consumers that it promptly placed or removed security freezes or locks. Though the CRA claimed it completed the requests to place or remove freezes or locks, it added the requests to a backlog. The law requires CRAs to promptly fulfill an individual’s request to place or remove security freezes or locks. It also mandates the CRAs to provide this service for free.

Another mark against the rental screening company concerns pre-screened offers. CRAs must keep active-duty military personnel off these lists. This requirement reduces the risk of identity theft for such personnel, especially when they travel overseas for long periods.

What Could Happen

If the court enters the order the CFPB and FTC have proposed, the CRA and its subsidiary would pay consumers $11 million. They would also stop the illegal tenant screening practices, such as not reporting more than one filing for a single eviction case. They must also refrain from reporting eviction cases without a final outcome. The company would also pay a $4 million penalty to the CFPB’s victims’ relief fund.

As for the $8 million, $3 million of it would go to consumers, and the remaining $5 million would go to CFPB’s victims’ relief fund. The CFPB also requested that the CRA find and correct its technology problems to prevent further consumer harm. They must fix these issues to ensure compliance when placing or removing security freeze and lock requests.

This case shows the importance of complying with the FCRA. Failure to do so can result in lawsuits, fines, and penalties. The best way for businesses to ensure compliance with the FCRA in their screening processes is to partner with an experienced background-checking company.

Keep your business compliant with new laws and regulations with JDP’s reliable background checks. Contact a sales rep today.

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The Federal Trade Commission (FTC) recently announced that it will require two background reporting companies and three related organizations to pay a $5.8 million penalty. This decision settles allegations that they violated the Fair Credit Reporting Act (FCRA). In addition, this penalty addresses claims that the companies marketed their consumer background reports as a tool to screen applicants.

According to Samuel Levine, Director of the Bureau of Consumer Protection, “Companies that compile personal information and sell background reports are on notice: Don’t make false claims about the contents of your reports. And, if you market your reports to be used to screen tenants or employees, you are a consumer reporting agency, and you must follow the requirements of the FCRA.”

The Complaint

The FTC complaint explained that the companies made themselves subject to the FCRA. They accomplished this by purchasing advertising keywords from major search engines to make their services appear for employment or tenant screening services. These purchases included keywords such as “pre-employment screening” and “tenant background check.” The FTC argued how providing these background reports with the expectation to use them for employment or housing qualifies them as consumer reporting agencies under the FCRA.

According to the FTC, these companies committed multiple violations under the FCRA. For example, the companies failed to comply with the FCRA’s Section 607(a): Furnish consumer reports for “permissible purposes” only. The companies also failed to investigate or respond to consumer disputes despite providing buttons marked “Remove” and “Flag as Inaccurate.”

What Happened

Furthermore, the companies advertised their extreme accuracy despite taking no steps to verify the accuracy of third-party information. The FTC also claimed the companies provided push notifications or statements indicating that individuals had criminal or arrest records. However, consumers had to pay a monthly subscription fee to see the full report. In many cases, the reports only contained non-criminal traffic violations.

The proposed settlement is still waiting for approval by a judge. Until approved, the companies must implement a monitoring program to ensure they do not violate the FCRA further. Furthermore, this program will assess whether they operate as a whole or partial consumer reporting agency.

This case serves as a reminder that all employers must comply with the FCRA when acquiring consumer reports. One way to ensure compliance is by working with a trustworthy background screening company. The right provider will provide accurate reports that meet federal, state, and local screening regulations.

JDP offers experienced background screenings to help you stay compliant in your hiring practices. Contact a sales rep today.

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According to the Federal Trade Commission (FTC), scams have worsened over the years. The FTC recently reported that American consumers lost $8.8 billion to fraud in 2022. This loss is a massive 30% rise from 2021, meaning citizens should exercise more caution to avoid scammers. 

It has become a common belief that scams typically target the older generations, which studies seemingly support when they report how adults aged 70-79 lose more money on average. However, these reports also revealed that young adults between 20-29 experienced fraud more frequently. This realization is why everyone should stay alert.

Today, scams often take place in the digital world. Many people encounter them on social media, dating apps, online marketplaces, even digital payment platforms. Transferring cash has become effortless thanks to platforms like Venmo or Cashapp. However, this also means it became easier for thieves to commit fraudulent transactions.

Here are examples of scams taking place in the digital world:

Robocalls

Robocalls are a scam nearly every phone user has encountered—a pre-recorded message plays, usually with an “urgent” message. However, listening long enough ends with a request for the recipient to buy something or send money. These scams frequently impersonate authorities. For example, they may impersonate the IRS, FBI, or sheriff departments and claim an intent to apprehend the listener. Regardless of the impersonation, the caller requests money and warns they will arrest the recipient if they do not receive it.

Another common tactic is impersonating a loved one and requesting money to help with an emergency. The FTC warns everyone to act carefully when receiving an unexpected call that demands help immediately by sending money. You should regard this scenario with suspicion and contact authorities using official lines of communication to investigate the situation. Also, verify the loved one’s identity before wiring anything due to a phone call or text.

Romance Ruses

The oldest trick in the book involves romance scams, which grew in popularity among scammers due to online dating. These thieves steal pictures online and create fake profiles on social media and dating apps. Once created, they can message targets and build relationships over months or years. At some point, they will ask for money, either one large sum or repeated small requests.

The imposter typically removes the profile when the scam falls apart, leaving the victim without their perceived love or savings. Such scenarios emphasize the importance of confirming a person’s identity before engaging in a long-distance relationship with anyone online. The FTC also stressed that you should not send large sums of money to anyone without genuinely knowing the other person.

Other Social Media Deceptions

Other social media scams include “investment gurus.” You have probably seen testimonials and cryptocurrency experts online bragging about their quick money schemes. Many cases will encourage you to get in touch and send them money to get started. Once again, the FTC warns to never send money to anyone online unless you know the person.

The agency also warned against online quizzes and other “fun games” found on social media. These games probe for personal information like your name, relatives’ names, or birth date. This information may seem insignificant, but the FTC explained that thieves can use this data to piece together your identity and steal it.

Another aspect of social media to tread carefully in is the online marketplace. The FTC encourages buyers to check the seller’s profile and review the platform’s terms and conditions. As a seller, you should review the buyer’s profile and never accept unexpected payments.

Phishing

People receive unusual emails and texts daily–many of which are scams. The agency encourages you to exercise caution and determine the legitimacy of the situation before taking action. Always review the emails or texts for red flags, such as misspellings, strange senders, or unusual appearances.

These messages typically explain that your bank or utility service has locked your account. They also encourage you to log in immediately through the provided link. However, the FTC warns against following these links. Instead, visit the organization’s official website or call their customer service line to verify the account’s status. 

Gift Card Scams

One of the most common scams involves scammers requesting you to make payments through gift cards. This practice is untraceable, so many thieves prefer this scam over other methods. The FTC reminds all consumers that official methods never require paying via gift cards. It explained that gift cards do not qualify for the fraud protections other payment methods offer.

As such, the agency emphasized the importance of disbelieving phone calls claiming to work for the IRS and asking you to pay with gift cards. It also recommends you act cautiously when a social media profile that looks like a friend or family member requests gift cards from you. This profile is likely an imposter.

Another step to protect yourself from scammers is running a background check on yourself. This step informs you whether thieves have fraudulently used your identity–something you would not know until you check. Imposters tarnish their victims’ reputations, impeding their ability to acquire jobs, loans, and other financial needs. Consider a self-check to ensure accurate reports and to dispute fraudulent information.

Protect and guard your personal information and your identity with a seamless self background check. Try it today.

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The Federal Trade Commission (FTC) recently announced guidance for landlords, property managers, and others who require background checks on potential tenants. The tenant screening reports often contain information such as rental and eviction history, criminal history, and credit history. 

The guidance reminds housing providers, “Background checks from consumer reporting agencies are consumer reports, and under the law, [they] have certain responsibilities when it comes to using them.” It also clarified that individuals or businesses could obtain consumer reports only for permissible purposes. In addition, it stressed that they must use the consumer report for that purpose only, emphasizing no further uses.

The FTC also clarified what qualifies as “adverse actions.” For example, the agency revealed that adverse actions include using information from a consumer report, however briefly. Denying housing to an applicant or asking for a different deposit amount due to a consumer report also counts as adverse actions. 

The Fair Credit Reporting Act (FCRA) presides over adverse actions and requests for reports from consumer reporting agencies (CRAs). It requires housing providers to notify the applicant in an adverse action notice. The notice can be electronic, oral, or written. It must contain the following. 

• The name, address, and phone number of the CRA (including a toll-free number for nationwide CRAs) that supplied the report
• A statement that the CRA did not make the adverse decision and cannot explain why the decision
• Notice of the consumer’s right to a free copy of their report from the CRA if requested within 60 days FCRA § 612
• Notice of the consumer’s right to dispute the accuracy or completeness of any information provided by the CRA FCRA § 611
• The consumer’s credit score, if used

The adverse action notice must inform individuals of their right to access the information in the consumer report. It allows consumers to review the report’s contents. In addition, this report would allow consumers to dispute the details if they find misinformation or inaccuracies.

The guidance suggests supplying the consumer with adverse action notices in writing. This recommendation is because written notices benefit the housing provider and applicant. For example, housing providers may use it as physical proof of compliance. In addition, applicants may use it to assert their rights when requesting a copy of their consumer report from the CRA that supplied it to the landlord. It also helps the dispute process when applicants challenge errors in their reports.

Similar to housing providers, employers must comply with the FCRA. Compliance includes providing an adverse action notice when taking related actions. Examples of adverse actions include denying employment or a promotion based on a consumer report. The best way to ensure compliance during the hiring process is to partner with an experienced background check company.

Disclaimer:

Information provided here is for educational and informational purposes only and should not constitute as legal advice. We recommend you contact your own legal counsel for any questions regarding your specific practices and compliance with applicable laws.

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