Privacy & Information Security Law Blog

On June 27, 2011, the Federal Trade Commission announced that it had reached a settlement with Teletrack, Inc. (“Teletrack”), a consumer reporting agency that sells consumer reports and other services to businesses that serve financially distressed consumers, after alleging that the company had sold information obtained through its consumer reporting business to marketers to create a marketing database. The FTC considered that the information sold by Teletrack, which included lists of consumers who applied for certain credit products, constituted “consumer reports” under the Fair Credit Reporting Act (“FCRA”) because it contained information about a consumer’s credit worthiness. The sale of such information by Teletrack to marketers violated the FCRA because marketing is not a permissible purpose by which consumer reporting agencies may furnish consumer reports to third parties. According to the FTC’s press release, the “settlement seeks to protect consumers’ privacy by ensuring that their sensitive credit report information is not sold for marketing purposes.”

The settlement order imposes a $1.8 civil penalty on Teletrack and certain reporting requirements to ensure Teletrack’s compliance with the order. In addition, Teletrack must “furnish credit reports only to those people that it has reason to believe have a permissible purpose to receive them under the FCRA, or as otherwise allowed by the FCRA.”