In a significant announcement, the Federal Trade Commission (FTC) has imposed fines totaling $6 million on two companies selling consumer background reports through subscriptions. These companies were found to be in violation of the FTC Act and the Fair Credit Reporting Act (FCRA). This information came from an article published on JD Supra, authored by the law firm Orrick, Herrington & Sutcliffe LLP.
The findings of the FTC investigation revealed that these companies made unsubstantiated claims of offering the most accurate background reports available to the public. In addition to this, the complaint lodged by the FTC alleges that the companies misrepresented individuals’ legal backgrounds by falsely claiming they had criminal or arrest records.
The FTC has also found that these companies falsely assured consumers that they were able to remove or flag inaccurate information in these reports. Such claims are clear violations of consumer protection standards and the fair reporting norms established under the FCRA. As part of the penalty, the firms are subject to severe financial penalties, including combined fines of $6 million, highlighting the high stakes involved for companies mishandling consumer information and demonstrating a disregard for legal requirements.
The unequivocal action by the FTC underscores the importance of wider corporate accountability, particularly within the realm of data management. Law firms and corporations should take note of the rigorous enforcement measures put in place for consumer protection and fair reporting. In light of this, companies must ensure that their practices comply with laws like the FCRA and the FTC Act to avoid hefty fines and potential damage to their reputation.