WASHINGTON (AP) — Federal regulators on Tuesday warned several companies that the quick, easy background checks they are providing online might violate the Fair Credit Reporting Act.
The Federal Trade Commission sent warning letters to 10 businesses, including sites like 4Nannies.com and USA People Search, after FTC staff posed as employers and creditors looking for information that could be used to deny a person a job, an apartment or even insurance.
The law requires that companies providing information to potential employers, landlords, insurers and creditors double check the accuracy of their records and notify a person if a background check has been done. And in some cases, the businesses need to make sure the person asking for the information has a legitimate purpose for receiving it.
If the business doesn't take these additional steps, it must make clear that its background checks or consumer lists may include errors and should be used for marketing or entertainment purposes only.
Laura Berger, a staff attorney with the FTC Bureau of Consumer Protection, said the FTC's primary concern is that these companies are aggregating information without a person's knowledge and selling personal records that could be out-of-date or inaccurate.
"They (consumers) don't have the ability to review, challenge and correct the information," Berger said.
The warning letters are part of a broader effort by the FTC in recent months to keep in check the impact of "data brokers," companies that buy and sell mass amounts of personal data. Last December, the FTC ordered nine other major data brokers, including marketing giant Acxiom, to disclose exactly what information they collect on consumers and how they use it. Data brokers have been reluctant to discuss that information publicly because they say it could tip their hand to competitors.
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