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Mobile apps offering background checks may violate Fair Credit Reporting Act

Consumer Reports News: February 06, 2012 02:38 PM

The Federal Trade Commission today warned marketers of six mobile applications that provide background-screening apps that they may be violating the Fair Credit Reporting Act.

In a letter to the apps marketers the FTC said "If you have reason to believe that your background reports are being used for employment or other FCRA purposes, you and your customers who are using your reports for such purposes must comply with the FCRA." The FTC has not yet determined whether the companies are violating the FCRA.

The FCRA is meant to protect the privacy of the information in background reports and ensure that the information is accurate. Such reports are used for credit, employment, housing, and other such purposes.

Under the FCRA, companies that assemble or evaluate information for third parties qualify as consumer reporting agencies, or CRAs. Mobile apps that supply such information may qualify as CRAs under the Act. CRAs must ensure the user of each background report has a 'permissible purpose' to use the report, and ensure the accuracy of the information in its reports, among other stipulations.

A copy of the letter the FTC sent to the six marketers of mobile apps that offer background checks can be found here (pdf).

FTC Warns Marketers That Mobile Apps May Violate Fair Credit Reporting Act [FTC]

Maggie Shader

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