Regulator warns data brokers about credit reporting privacy rules

The Federal Trade Commission (FTC) has written to 10 data broker companies to raise concerns about the firms' compliance with the US' Fair Credit Reporting Act (FCRA). The regulator said that a "test-shopping operation" it had carried out had revealed practices from the 10 data brokers that showed they were "willing to sell consumer information without abiding by FCRA requirements".

"Data broker companies that collect, distribute or sell this information 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," the FTC said in a statement. "This requirement ensures that the privacy of sensitive consumer report information is protected. Of the 45 companies contacted by FTC staff in the test-shopper operation, ten appear to violate the FCRA by offering to provide the information without complying with the law's requirements."

The FTC said that two companies had "appeared to offer 'pre-screened' lists of consumers for use in making firm offers of credit" and that a further two forms had "appeared to offer consumer information for use in making insurance decisions". Six of the ten firms the regulator has written to "appeared to offer consumer information for employment purposes", it said.

"The letters are not an official notice by the Commission that any of the named companies is subject to the requirements of the FCRA, nor do the letters lay out any formal complaints against the companies," the FTC said. "Instead, they serve 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."