FTC hits ‘data brokers’ for bad reports, false sex offender claims

Two background check companies have settled Federal Trade Commission (FTC) charges that they gave bad reports to potential bosses and landlords, including false suggestions by one firm that some job candidates were registered sex offenders.

The two “data brokers” were accused of breaking the law by giving consumers’ reports to some users without making sure that the information was accurate or ensuring that their users had a legal reason to obtain the background checks.

The companies, Instant Checkmate and InfoTrack information Services, were ordered to pay a combined $1.5 million fine for the infraction. However, only $585,000 of that will go through because InfoTrack is unable to pay the full $1 million it owes.

“Consumers shouldn’t have to worry that they’ll be turned down for a job or an apartment because of false information in a consumer report,” said the head of the FTC’s consumer protection division, Jessica Rich, in a statement. “Data brokers that operate as consumer reporting agencies have a responsibility to ensure the accuracy of the information they sell for decisions about whether to hire someone, extend them credit, rent them an apartment, or insure them.”

Both of the data brokers compiled and sold public information about people to potential employers, landlords and others.

More than 400 of the bad reports that InfoTrack gave to potential employers said that job applicants were a “possible match” with someone on the national sex offender registry. That determination, however, was based solely on their first and last name, not other identifying information.

Both companies also neglected to tell employers that they needed to give applicants notice to let them correct possible flaws in the reports.

In addition to the fine, Instant Checkmate was barred from violating the Fair Credit Reporting Act and InfoTrack was ordered to comply with a variety of measures in the law. InfoTrack is also sending a notice to each person whose report may have falsely indicated they were a sex offender.  


-- Updated at 5:30 p.m.