Spokeo Charged with Violating FCRA

Spokeo, a data broker that gathers and sells information profiles on millions of consumers, will have to pay $800,000 fine to settle a Federal Trade Commission (FTC) charge.

The Federal Trade Commission alleges that Spokeo violated the Fair Credit Reporting Act (FCRA) by marketing its services to recruiters, Human Resource departments, and Background Screening companies without taking the proper steps to ensure their data selling practices protected consumers under the FCRA.

The Federal Trade Commission alleged that Spokeo was operating as a Consumer Reporting Agency (CRA) and violated the following FCRA provisions:

• Information used would be for employment or other legally permissible purposes
• Failing to ensure the information was accurate and up to date
• Failing to tell end-users about their obligation under the FCRA (Specifically to notify consumers if end-users were taking any adverse action based on the information)

Furthermore, the settlement stated that Spokeo willfully posted endorsements of their solutions on industry-specific websites and blogs to make it seem as though Spokeo’s data was coming directly from users when in fact it was created by Spokeo employees.

This is the first Federal Trade Commission case to address the sale of Internet-based and social media data in the employment screening context.