The Federal Trade Commission (FTC) recently contacted three mobile application developers that provide background screening services to notify them that they may be subject to the Fair Credit Reporting Act (FCRA) and may fall under the definition of a consumer reporting agency (CRA). A CRA is an agency that compiles consumer reports to furnish to third parties. The three companies involved were Everify, Inc. (marketer of “Police Records” app), InfoPay, Inc. (marketer of “Criminal Pages” app), and Intelligator, Inc. (marketer of “Background Checks,” “Criminal Records Search,” “Investigate and Locate Anyone,” “People Search,” and “Investigator” apps).

Many of the applications marketed by the companies that received the letters include criminal records, which are often used by employers and landlords for screening purposes. According to the letters sent to the app providers, the records that they provide may be considered “consumer reports” under the FCRA because they “relate to an individual’s character, reputation or personal characteristics and are used or expected to be used for employment, housing, credit, or other similar purposes.”

If considered CRAs, the companies will have to comply with the FCRA. For example, the FCRA includes provisions requiring CRAs to ensure the accuracy of information they disseminate and to provide information about the FCRA to individuals that access their reports. The FTC made special note that disclaimers, indicating that the information provided through the apps is not for employment purposes, are insufficient to get around compliance with the FCRA. The companies were encouraged to review their applications, their policies, and the FCRA. At this time, no formal complaints or actions have been filed against the companies based on non-compliance.

All companies that operate in the area of background screenings or that market applications and other services that screen and compile consumer information should be aware of the FCRA and the FTC’s recent notices. If a company falls under the definition of a CRA and fails to comply, it may become the subject of a formal FTC investigation. If the FTC determines that a company that qualifies as a CRA has not complied, it may issue an injunction, require a monetary settlement, and/or implement an auditing and compliance program.

Arent Fox is continuing to monitor this issue. Please contact Sarah Bruno, Matthew Mills, or Eva Pulliam with questions.