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With Warning that Data Brokers’ Tenant Reports May Be Subject to FCRA, FTC Highlights the Need to Value Consumers’ Personal Information

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.

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