On January 16, 2014, the Federal Trade Commission announced a settlement with TeleCheck Services, Inc., and its affiliated debt-collection entity, TRS Recovery Services, Inc. (collectively, “TeleCheck”). The settlement stems from allegations that TeleCheck violated various provisions of the Fair Credit Reporting Act (“FCRA”). According to the press release, the settlement is “part of a broader initiative to target the practices of data brokers, which often compile, maintain, and sell sensitive consumer information” and is similar to an FTC settlement with a different company in August 2013.
In its complaint, the FTC alleged that TeleCheck, a company that provides check verification services for merchants, did not follow reasonable procedures to ensure the maximum possible accuracy of report information it maintained about consumers. According to the complaint, TeleCheck did not sufficiently track the resolution of consumer disputes, which increased the risk that inaccurate information was retained in consumer’s files. Among other violations, the complaint alleged that TeleCheck (1) impermissibly shifted the burden to consumers to investigate disputed information, (2) impermissibly restricted investigations into disputed information, (3) failed to complete the investigations it did undertake within the time periods specified in the FCRA, and (4) failed to maintain reasonable procedures to avert the reappearance of information that was deleted pursuant to an investigation from a consumer’s file.
The settlement, filed in the United States District Court for the District of Columbia, includes requirements that TeleCheck:
- pay $3.5 million to the FTC as a civil penalty;
- refrain from violating relevant provisions of the FCRA;
- submit a compliance report to the FTC within 180 days;
- notify the FTC of any changes in its structure that may affect its compliance with the settlement for 10 years;
- create certain records (e.g., accounting and personnel records as well as consumer complaints and training materials) for 10 years, and retain each record created for five years; and
- submit compliance reports to the FTC upon request.
In the press release accompanying the settlement, Jessica Rich, the Director of the FTC’s Bureau of Consumer Protection, stated that “[i]f [consumer reporting agencies] like TeleCheck provide merchants with inaccurate information, those merchants may wrongly deny consumers the ability to buy even the most essential items, like food and medicine.”