On January 10, the Federal Trade Commission (FTC) announced a settlement with app developer Filiquarian Publishing, LLC, that compiled and sold criminal records. The FTC alleged that the developer operated as a consumer reporting agency without complying with the consumer protection measures required under the Fair Credit Reporting Act (FCRA). This settlement was the first FCRA enforcement action against a mobile app developer.
According to the FTC’s blog post, even though the developer included disclaimers on its website that the background screening reports weren’t to be considered screening products for insurance, employment, loans, and credit applications, and that they weren’t FCRA-compliant, these disclaimers didn’t mean much to the FTC since the developer’s ads expressly urged consumers to use the app to screen potential employees. “Just saying that the info can’t be used for FCRA purposes doesn’t absolve a company from liability”.
The blog post also notes that a warning letter was previously sent to 6 app developers last year, warning them that if they suspected their reports were being used for employment purposes, then they needed to comply with the FCRA. “This is true even if you have a disclaimer on your website indicating that your reports should not be used for employment or other FCRA purposes.”
So what’s the take away? According to the blog post, it’s that regardless of the technology involved, if a company offers background reports for employment or other FCRA purposes, then they must comply with the FCRA. Another takeaway: “It’s wise to pay attention to what the FTC says in warning letters to other companies.”