FCRA Violations Incite FTC and CFPB Action Against Consumer Reporting Agency
October 19, 2023
The Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) recently took action against a rental screening company. This company is a subsidiary of a major consumer reporting agency (CRA) and allegedly violated the Fair Credit Reporting Act (FCRA). According to the suit, the company failed to ensure the accuracy of rental background checks provided to landlords.
Furthermore, the rental screening company kept the identity of the third parties from renters. These third parties allegedly provided inaccurate information, harming the renters’ opportunities and image. The FTC and CFPB have requested a federal court to have the CRA pay $15 million to cover the FCRA violations. They also asked for improvements to how the CRA reports evictions.
The joint complaint explained that the rental screening company repeatedly failed to ensure they delivered up-to-date reports. Failing this, the CRA revealed it did not use recent public records, missing dismissed evictions. As such, it reported several entries for the same eviction case and included sealed records.
Furthermore, the rental screening company refused to disclose who provided the inaccurate information. Instead, it claimed the criminal or eviction records came from the jurisdictions where the proceedings occurred. If true, the affected individuals had to contact third-party vendors to correct this inaccurate information. However, the company failed to share this information with the renters.
The CRA must pay $8 million for falsely informing consumers that it promptly placed or removed security freezes or locks. Though the CRA claimed it completed the requests to place or remove freezes or locks, it added the requests to a backlog. The law requires CRAs to promptly fulfill an individual’s request to place or remove security freezes or locks. It also mandates the CRAs to provide this service for free.
Another mark against the rental screening company concerns pre-screened offers. CRAs must keep active-duty military personnel off these lists. This requirement reduces the risk of identity theft for such personnel, especially when they travel overseas for long periods.
What Could Happen
If the court enters the order the CFPB and FTC have proposed, the CRA and its subsidiary would pay consumers $11 million. They would also stop the illegal tenant screening practices, such as not reporting more than one filing for a single eviction case. They must also refrain from reporting eviction cases without a final outcome. The company would also pay a $4 million penalty to the CFPB’s victims’ relief fund.
As for the $8 million, $3 million of it would go to consumers, and the remaining $5 million would go to CFPB’s victims’ relief fund. The CFPB also requested that the CRA find and correct its technology problems to prevent further consumer harm. They must fix these issues to ensure compliance when placing or removing security freeze and lock requests.
This case shows the importance of complying with the FCRA. Failure to do so can result in lawsuits, fines, and penalties. The best way for businesses to ensure compliance with the FCRA in their screening processes is to partner with an experienced background-checking company.
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