FTC warns mobile app marketers providing background checks

WASHINGTON—The Federal Trade Commission has sent letters to marketers that the agency says may be providing criminal background information to employers through the marketers' background screening applications—an activity the FTC says may violate the Fair Credit Reporting Act.

The letters, dated Jan. 25 but released Monday, were sent to Boston-based eVerify Inc., marketer of the Police Records app; the Plainville, Conn., office of Fort Lauderdale, Fla.-based InfoPay Inc., marketer of the Criminal Pages app; and Vancouver, Wash. based Intelligator Inc., marketer of Background Checks, Criminal Records Search, Investigate and Locate Anyone, People Search and Investigator apps.

The FTC letter said under the Fair Credit Reporting Act, a company is a “consumer reporting agency” if it provides information relating to a person's character, reputation or personal characteristics that is used for employment and other purposes. Therefore, the companies must comply with several different FCRA provisions.

The provisions include taking reasonable steps to ensure the “maximum possible accuracy” of the information provided, and notifying employers of their obligation to provide applicants with notice of any adverse action taken on the basis of such reports.

“At least one of your company’s mobile applications involves background screening reports that include criminal histories,” the FTC said in a sample letter it released.

“Employers are likely to use such criminal histories when screening job applicants. If you have reason to believe that your reports are being used for employment or other FCRA purposes, you and your customers who are using the reports for such purposes must comply with the FCRA. This is true even if you have a disclaimer on your website indicating that your reports should not be used for employment or other FCRA purposes.”

The letter further states, “We would evaluate many factors to determine if you had had a reason to believe that product is used for employment or other FCRA purposes, such as advertising placement and customer lists. At this time, we have not made a determination as to whether your company is violating the FCRA. However, we encourage you to review your mobile applications and your policies and procedures for compliance with the FCRA.”

EVerify General Manager Alon Cohen said the Police Record app was devised by an affiliate, not eVerify, and that the company’s attorney is working with the FTC on the issue.

Spokesmen for the other firms could not be reached for comment.

A report by law firm Littler Mendelson P.C. released late last year explains how an earlier report by the FTC, “40 Years of Experience with the Fair Credit Reporting Act: An FTC Staff Report with Summary of Interpretations,” illuminates areas of potential class action exposure for employers.