FTC Issues Warnings to Firms that Share Consumer Info

The Federal Trade Commission sent warning letters earlier this week to 10 data brokerage firms. The agency warned the firms that the gathering and selling of consumer information could be in violation of federal privacy laws. The new letters follow last month’s action by the FTC when it issued similar warnings to six companies who offered to share tenants’ rental histories with landlords.

The New York Times reports that the brokerage firms, “most of which market their services online and through toll-free phone numbers, appeared to be offering to sell consumer data for use in screening job candidates, determining eligibility for insurance or making offers of credit, the FTC said.”

“Such practices could violate the Fair Credit Reporting Act if the sellers are legally considered ‘consumer reporting agencies’ and they fail to verify that customers buying the consumer information have a legitimate purpose for receiving it,” notes the article.

The letters are not formal complaints, but rather, “they serve to remind the companies to evaluate their practices to determine whether they are ‘consumer reporting agencies,'” says the FTC.

The 10 brokerage firms were part of a larger group of 45 organizations that were contacted by the FTC as part of an undercover test-shopping operation. “Members of its staff posed as individuals or company representatives and asked for help in gathering certain types of consumer data,” explains NYT.