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FTC Issues Warning Letters to Companies over Mobile Background Checking Apps

  February 17, 2012

The U.S. Federal Trade Commission has sent warning letters to the makers of six mobile apps used for background checks, saying the apps may violate the Fair Credit Reporting Act (FCRA), intended to protect the privacy and accuracy of consumer report information.

Part of the FCRA requires companies to take reasonable steps to ensure the accuracy of the information they sell and to tell employers using their services about their obligations to applicants.  It seems that the FTC has reason to believe that customers using these apps may not be complying with the FCRA.  As a first step, these warning letters are asking these companies to review their apps and policies to ensure compliance.

Do these companies and their apps qualify as consumer reporting agencies?  As sensitive information that can be used for employment screening, housing, and credit, becomes more readily available the FTC will be taking a closer look at these companies to make sure they are taking the necessary steps to provide accurate information and provide its users information regarding their obligations.

I expect the screening industry will be paying close attention to this case to see what the company’s response will be and what the FTC will do next.

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