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

The growing use of mobile applications has created great opportunities for all types of businesses. Many companies have leveraged apps to enhance their reach and interactions with customers and potential customers. But with these growing opportunities comes some legal pitfalls. Many companies are not focusing on the vast array of legal issues that relate to what their apps do. The FTC and other government agencies are becoming more active in policing these activities.

In a recent pronouncement, the FTC has warned marketers that certain apps may violate the Fair Credit Reporting Act. The FTC warned the apps marketers that, if they have reason to believe
the background reports they provide are being used for employment
screening, housing, credit, or other similar purposes, they must comply
with the Act.

According to the announcement, “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 FCRA is designed to protect the privacy of consumer report
information and ensure that the information supplied by consumer
reporting agencies is accurate. Consumer reports are communications
that include information on an individual’s character, reputation, or
personal characteristics and are used or expected to be used for
purposes such as employment, housing or credit.
The companies that received the letters are Everify, Inc., marketer of the Police Records app, InfoPay, Inc., marketer of the Criminal Pages app, and Intelligator, Inc., marketer of Background Checks, Criminal Records Search, Investigate and Locate Anyone, and People Search and Investigator apps. According to the letters, the agency has made no determination whether
the companies are violating the FCRA, but encourages them to review
their apps and their policies and procedures to be sure they comply with the FCRA.

In light of the FTC, FDA, FCC and other government agency’s increased activity in monitoring mobile apps and other social media usage, it is strongly advisable that you submit all of you apps and social media plans to a qualified attorney to review for potential compliance issues.