In a significant development affecting corporations handling credit information, a leading credit reporting agency and one of its subsidiaries are required to pay $15 million as part of a settlement. The settlement resolves a complaint jointly filed by the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB).
The complaint, lodged on October 12, 2023, alleges that the agency’s tenant and employment background screening reports violated the Fair Credit Report Act (FCRA). JD Supra coverage can be found here.
It is a material development for corporations in the legal and financial sectors. As members of the industry are likely aware, the FCRA was put in place to ensure accuracy, fairness, and privacy of information in the files of every consumer reporting agency. The enforcement of this act comes within the joint purview of the FTC and the CFPB, making the agencies responsible for overseeing the corporate compliance with the FCRA’s requirements.
This recent case serves as a powerful reminder for corporations about the importance of adherence to regulatory requirements when it comes to dealing with consumer credit information. There remains a high level of scrutiny around how companies handle such data, particularly in employment and tenant screening contexts.
Details regarding the specific irregularities in the screening reports were not stated in the initial announcement of the settlement. Further, there also weren’t any details regarding how the $15 million settlement fund will be used. Companies in the field await these details with keen interest as they can inform future compliance initiatives.
The severity of this penalty makes it an imperative that all corporations handling similar sensitive information review their regulatory adherence procedures. Importantly, the case serves as a warning about the financial and reputational damage at stake for non-compliance with federal law.
Using this event as a case study, corporations can improve their practices in maintaining, distributing, or making decisions based on credit reports, while complying with the guidelines and protecting the privacy rights of individuals. Legal professionals within companies would do well to frame this as a cautionary note, pushing for internal reviews and updating of practices in light of these developments.