Last week, the Federal Trade Commission revealed that it had sent letters to six different data brokers, all of whom provide requestors with reports detailing individual tenant histories, warning them that their practices may be subject to the Fair Credit Reporting Act (“FCRA”). This move follows the FTC’s announcement that it is investigating data brokers that mine consumer information and a congressional inquiry of the industry’s practices.
In its letter to the data brokers, the FTC points out how data brokers that assemble and share individuals’ rental histories are likely “consumer reporting agencies” issuing “consumer reports” and thus subject to the Fair Credit Reporting Act (“FCRA”). As the letter describes in detail, the FCRA requires consumer reporting agencies that issue these sorts of reports must ensure they are being used correctly, are as accurate as possible, and provide consumers access to the reports and a chance to dispute information believed to be inaccurate. Companies that fail to do this may be subject to damages for each violation of the law.Although the FTC’s letter is primarily concerned with the requirements of the FCRA, there are some general lessons that can be taken from this move. First, businesses that covertly collect and share consumer information risk bad press and legal action by the FTC. Second, when a company collects information for one purpose (e.g., an application for a first apartment), the law frowns upon subsequent uses of that information that are different and that a normal consumer wouldn’t expect (e.g., to deny them the next apartment). Lastly, as technology increases the detail of data brokers’ consumer profiles and expands the types of personal information they can trade, the public’s expectation of privacy in such information should not be discounted.