An increasing number of technologies focused on helping businesses streamline their recruiting and onboarding processes have emerged in recent years. Unfortunately, when it comes to legal compliance, not all solutions were created equal. In fact, The Federal Trade Commission issued notices to mobile application developers InfoPay Inc., Everify Inc., and Intelligator Inc. earlier this month, warning that they may be marketing products that are in violation of the Fair Credit Reporting Act. The FTC informed the companies that if they have any reason to believe the reports generated by six of their mobile background screening apps are being utilized for credit, employment, housing, or other FCRA regulated purposes, then those reports must abide by standards set forth by the FCRA.
The Case?
According to the FTC, there are two compelling pieces of evidence indicating that these companies and their products may fall under the FCRA:
- It alleges that since consumer reporting agencies (CRAs) are “entities that assemble or evaluate information to provide to third parties,†the mobile apps potentially qualify as CRAs.
- The FTC points to the fact that InfoPay’s Criminal Pages, Everify’s Police Records, and Intelligator’s Background Checks, Criminal Records Search, People Search and Investigator, Investigate and Locate Anyone apps all include criminal record histories, which bear on an person’s character and reputation. Since consumer reports are defined as “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 FTC’s position is that the data generated by the apps may constitute a consumer report.
If these apps are indeed acting as CRAs, the companies in question have a legal obligation to:
- Take reasonable steps to ensure the users of each report has a permissible purpose.
- Take reasonable steps to ensure maximum possible accuracy of the information conveyed in the reports their apps produce.
- Provide users of their reports with information about their obligations under the FCRA.
Though the FTC notices did not appear to make an official determination regarding whether the companies are in violation of the FCRA, they did urge each company to evaluate their products, protocols, and policies to ensure they are compliant with the Act.
For now, our recommendation is simply be smart and beware. While it may be tempting to go with a low-cost, tech-savvy option to fulfill your background screening needs today, that decision could lead to an avalanche of FCRA litigation tomorrow.
