Privacy & Information Security Law Blog

On December 7, 2023, the Court of Justice of the European Union (“CJEU”) ruled that credit scoring constitutes automated decision-making, which is prohibited under Article 22 of the EU General Data Protection Regulation (“GDPR”) unless certain conditions are met. In a case stemming from consumer complaints against German credit bureau SCHUFA, the CJEU found that the company’s reliance on fully automated processes to calculate creditworthiness and extend credit constitutes automated decision-making which produces a legal or similarly significant effect within the meaning of Article 22 of the GDPR.

On February 16, 2023, the National Credit Union Administration (“NCUA”) Board unanimously approved a final rule requiring federally insured credit unions (“FICUs”) to notify the NCUA as soon as possible, within 72 hours, after an FCIU “reasonably believes” that a reportable cyber incident has occurred.

On January 6, 2022, the Federal Trade Commission reached a $1.5 million settlement with loan application company ITMedia Solutions LLC (“ITMedia”) over alleged violations of the FTC Act and Fair Credit Reporting Act (“FCRA”). The FTC alleged that ITMedia deceptively acquired and indiscriminately shared consumers’ sensitive personal information under the guise of connecting them with lenders.

On July 22, 2019, the Federal Trade Commission announced that Equifax Inc. (“Equifax”) agreed to pay at least $575 million, and potentially up to $700 million, as part of a global settlement agreement with the FTC, the Consumer Financial Protection Bureau (“CFPB”), and 48 U.S. states and territories to resolve investigations into the colossal data breach the company suffered in 2017. This is the largest data breach settlement in U.S. history.

Effective September 21, 2018, Section 301 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (the “Act”) requires consumer reporting agencies to provide free credit freezes and year-long fraud alerts to consumers throughout the country. Under the Act, consumer reporting agencies must each set up a webpage designed to enable consumers to request credit freezes, fraud alerts, extended fraud alerts and active duty fraud alerts. The webpage must also give consumers the ability to opt out of the use of information in a consumer report to send the consumer a ...

On June 25, 2018, the New York Department of Financial Services (“NYDFS”) issued a final regulation (the “Regulation”) requiring consumer reporting agencies with “significant operations” in New York to (1) register with NYDFS for the first time and (2) comply with the NYDFS’s cybersecurity regulation. Under the Regulation, consumer reporting agencies that reported on 1,000 or more New York consumers in the preceding year are subject to these requirements, and must register with NYDFS on or before September 1, 2018. The deadline for consumer reporting agencies to ...

As reported in the Hunton Employment & Labor Perspectives Blog:

On November 2, 2015, a putative class action was filed against retailer Big Lots Stores, Inc. in Philadelphia, stemming from allegations that the company “systematically” violated the Fair Credit Reporting Act’s (“FCRA’s”) “standalone disclosure requirement” by making prospective employees sign a document used as a background check consent form that contained extraneous information. Among other things, the plaintiff alleges that Big Lots’ form violates the FCRA because it includes the following three categories of extraneous information: (1) an “implied liability waiver” (specifically, a statement that the applicant “fully understand[s] that all employment decisions are based on legitimate nondiscriminatory reasons”); (2) state-specific notices; and (3) information on how background information will be gathered and from which sources, statements pertaining to disputing any information, and the name and contact information of the consumer reporting agency.

On October 17, 2014, the White House announced that the President signed a new executive order focused on cybersecurity.  The signed executive order, entitled Improving the Security of Consumer Financial Transactions (the “Order”), is focused on securing consumer transactions and sensitive personal data handled by the U.S. Federal Government.

On January 28, 2014, the Federal Court of Justice of Germany clarified the scope of a data subject’s right of access to personal data in the context of credit scoring. Germany’s Federal Data Protection Act contains detailed and expansive provisions on the right of access where personal data are processed and shared to determine a data subject’s future behavior.

On November 15, 2013, the People’s Bank of China (the “PBOC”) issued its Administrative Measures for Credit Reference Agencies (the “Measures”) – eight months after the Administrative Regulations on the Credit Information Collection Sector (the “Regulations”) became effective on March 15, 2013. The Measures, which will take effect on December 20, 2013, were formulated to enhance the supervision and regulation of credit reference agencies and to promote positive developments in the credit information services sector.

Recent news reports regarding the alleged purchase of personal information by a corporate investigative service firm in Shanghai have raised questions about the possibility of obtaining information about domestic Chinese companies from government corporate registration agencies.

On May 7, 2013, the Federal Trade Commission announced that it issued letters to ten data broker companies warning that their practices could violate prohibitions against selling consumer information under the Fair Credit Reporting Act (“FCRA”). The FTC identified the ten data broker companies after a test-shopping operation that indicated these companies were willing to sell consumer information without adhering to FCRA requirements.

On April 3, 2013, the Federal Trade Commission issued a press release announcing that it had sent warning letters to operators of six websites that provide rental history reports to landlords for tenant screening purposes. The letters informed the website operators that they may be considered consumer reporting agencies (“CRAs”) subject to the requirements of the Fair Credit Reporting Act (“FCRA”).

On February 11, 2013, the Federal Trade Commission announced that a congressionally-mandated study of the U.S. credit reporting industry found that 26 percent of consumers identified at least one error that might affect their credit score. The study reported that 5 percent of consumers had errors on their credit reports that could result in less favorable terms for loans and insurance.

Reporting from Australia, former Australian Privacy Commissioner Malcolm Crompton, Managing Director of Information Integrity Solutions Pty Ltd (“IIS”), writes:

The Australian Privacy Amendment (Enhancing Privacy Protection) Act 2012 (the “Act”) will make significant changes to the Privacy Act 1988. It’s early days for the changes and the impact for organizations will depend on their circumstances. Over the next 15 months we expect to see a range of guidance material from the Office of the Australian Information Commissioner.

In a January 13, 2013 blog post, the Federal Trade Commission’s Bureau of Consumer Protection’s Business Center Blog highlighted the FTC’s recent groundbreaking settlement for violations of the Fair Credit Reporting Act (“FCRA”) in the mobile app context. The settlement with Filiquarian Publishing, LLC, Choice Level, LLC, and Joshua Linsk (the owner of Filiquarian and Choice Level, collectively, the “Companies”), is the first FCRA enforcement action against a mobile app developer. Filiquarian offered mobile apps to consumers for purposes of conducting criminal background checks in numerous states, and Choice Level provided the criminal background checks used by the apps to Filiquarian.

On May 2, 2012, Australia’s Attorney General Nicola Roxon announced that the Australian government will introduce a bill to the Australian Parliament that will enact a number of the recommendations from the 2008 Law Reform Commission Report (ALRC Report 108) and reform privacy law in Australia. Discussion drafts of segments of the bill were considered by a Senate Committee in 2011. On May 4, Australian Privacy Commissioner Timothy Pilgrim presented an overview of the draft legislation at an event held during the iappANZ Privacy Awareness Week. Commissioner Pilgrim noted that the legislative package includes:

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.”

As reported in the Hunton Employment & Labor Perspectives Blog:

The U.S. Department of Justice has moved to intervene to defend the constitutionality of the Fair Credit Reporting Act (“FCRA”) against a consumer reporting agency accused of violating § 605 of the FCRA.

On November 23, 2010, Shamara T. King filed suit against General Information Services, Inc. (“GIS”) in Pennsylvania federal court claiming violations of the FCRA. (See, King v. General Information Services, Inc., No. 2:10-CV-06850 (E.D. Pa. Nov. 23, 2010). Specifically, King claims that when she applied for a job with the United States Postal Service, GIS performed a background check that included details about a car theft arrest that occurred more than seven years prior to the requested background check. According to § 605(a)(5) of the FCRA, consumer reporting agencies cannot provide adverse information, except for criminal convictions, “which antedates the report by more than seven years.”

As reported in the Hunton Employment & Labor Perspectives Blog, Connecticut recently became the latest state to pass a law regulating employer use of credit reports. The law, which goes into effect on October 1, 2011, prohibits employers from requiring employees or prospective employees to consent to the employer requesting their credit report as a condition of employment.  The full post includes a discussion of the exceptions to this restriction.

Read our previous posts on regulatory scrutiny of employee credit checks and a similar Illinois law that went into effect on January 1 ...

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 ...

On June 13, 2011, Representative Mary Bono Mack (R-CA) released a discussion draft of the Secure and Fortify Data Act (the “SAFE Data Act”), which is designed to “protect consumers by requiring reasonable security policies and procedures to protect data containing personal information, and to provide for nationwide notice in the event of a security breach.”  Representative Bono Mack is Chairman of the House Subcommittee on Commerce, Manufacturing and Trade.  In a press release, Representative Bono Mack remarked that “E-commerce is a vital and growing part of our economy.  We should take steps to embrace and protect it – and that starts with robust cyber security.”  She added that “consumers have a right to know when their personal information has been compromised, and companies and other organizations have an overriding responsibility to promptly alert them.”

On August 10, 2010, Illinois Governor Pat Quinn signed the Employee Credit Privacy Act, which prohibits most Illinois employers from inquiring about an applicant’s or employee’s credit history or using an individual’s credit history as a basis for an employment decision.  The definition of “employer” under the Act exempts banks, insurance companies, law enforcement agencies, debt collectors and state and local government agencies that require the use of credit history.

Provisions of the FTC’s revised rule that regulate advertisements for free credit reports become effective April 2, 2010.  As required by the Credit CARD Act of 2009, the FTC promulgated the revised rule on February 22, 2010, to prevent the deceptive marketing of free credit reports by companies that required consumers to sign up for paid products and services such as credit monitoring in order to receive the reports.