On February 6, 2012, the Federal Trade Commission warned six marketers of background screening mobile applications that they may be violating the Fair Credit Reporting Act (“FCRA”). In a sample letter posted on the FTC website, the FTC indicates that at least one of the recipient marketer’s mobile apps involves background screening reports that include criminal history checks. Pursuant to the FCRA, this could make the marketers of the mobile apps “consumer reporting agencies” if they are “providing information to employers regarding current or prospective employees’ criminal histories [that] involves the individuals’ character, general reputation, or personal characteristics.”
The FCRA requires consumer reporting agencies that have “reason to believe” that their reports are being used for employment or other FCRA purposes to take certain actions. The consumer reporting agencies must, for example, (1) ensure that its customers have a “permissible purpose” under the FCRA to use the reports and (2) give employers “information regarding their obligation to provide employees or applications with notice of any adverse action taken on the basis of these reports.”
The sample letter also states that the FTC has not yet determined whether the marketers are violating the FCRA, but instead urges them to review their mobile apps and policies and procedures for FCRA compliance. This latest warning by the FTC follows the Commission’s first privacy settlement involving mobile apps, which was announced in August 2011.