FTC warns data brokers they may be selling consumer information illegally

Photo(James Hood @ ConsumerAffairs) Data brokers are always assuring consumers that their data is never misused, always handled with care and so forth. But the reality doesn't always measure up to the promises, as the Federal Trade Commission (FTC) found when it conducted what amounted to a sting operation.



FTC staff members posed as individuals or representatives of companies seeking information about consumers to make decisions related to their creditworthiness, eligibility for insurance or suitability for employment.

As a result, the agency has sent warning letters to ten data broker companies warning that their practices could violate the Fair Credit Reporting Act (FCRA).

Data broker companies are considered consumer reporting agencies under the FCRA, meaning they must reasonably verify the identities of their customers and make sure that these customers have a legitimate purpose for receiving the information.

Of the 45 companies contacted by FTC staff in the test-shopper operation, ten appeared to violate the FCRA by offering to provide the information without complying with the law’s requirements.

The ten companies receiving the warning letters from the FTC include:

The letters are meant to remind the companies to evaluate their practices to determine whether they are consumer reporting agencies, and if so, how to comply with that law.