The Federal Trade Commission has approved a settlement against Filiquarian Publishing LLC, Choice Level LLC and their CEO Joshua Linsk - all charged with operating a consumer reporting agency without taking consumer protection measures required by the Fair Credit Reporting Act (FCRA).

The FTC's complaint alleged that the respondents failed to ensure that the information they sold was accurate and would be used only for legally permissible purposes, and failed to tell users of the respondents’ criminal record reports about their FCRA obligations, including a requirement to notify consumers if an adverse action was taken against them based on a report.  The proposed order was accepted for public comment on January 16.

The settlement prohibits the respondents from furnishing a consumer report to anyone they do not have reason to believe has a “permissible purpose” to use the report.

It also requires them to take reasonable steps to ensure the maximum possible accuracy of the information conveyed in its reports, and to provide users of its reports with information about their FCRA obligations. Violations of the consent order may be subject to civil penalties of up to $16,000 per violation.

The complaint alleged the operators failed to tell users of their criminal record reports about their obligations under the FCRA, including the requirement to notify consumers if an adverse action was taken against them based on a report. The settlement prohibits the respondents from future FCRA violations and resolves the agency’s first FCRA case involving mobile apps.

Filiquarian, according to the FTC, claimed consumers could use its mobile apps to access hundreds of thousands of criminal records and conduct searches on potential employees. One app stated, “Are you hiring somebody and wanting to quickly find out if they have a record?  Then Texas Criminal Record Search is the perfect application for you.” 

Consumers who paid 99 cents to download one of its apps from iTunes or the Google Android store (now GooglePlay) could conduct an unlimited number of searches for criminal records within a particular state or county. Choice Level provided the criminal records to Filiquarian that were accessed via Filiquarian’s mobile app.

As alleged in the complaint, both companies used disclaimers stating that they were not FCRA compliant; that their products were not to be considered screening products for employment, insurance, and credit screening; and that anyone who used their reports for such purposes assumed sole responsibility for FCRA compliance.

According to the FTC’s complaint, these disclaimers were not enough to avoid liability under the FCRA because the company advertised and expected that its reports could be used for employment purposes.

The settlement bars the respondents from furnishing a consumer report to anyone they do not have reason to believe has a “permissible purpose” to use the report, failing to take reasonable steps to ensure the maximum possible accuracy of the information conveyed in its reports, and failing to provide users of its reports with information about their obligations under the FCRA.

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