Spokeo Agrees To $800,000 FTC Settlement

Spokeo, Inc. has agreed to pay the FTC $800,000 to settle the FTC's claims alleging that Spokeo violated the Fair Credit Reporting Act (FCRA) and committed unfair or deceptive acts or practices under the FTC Act. Spokeo is a data broker that collects personal information of millions of consumers and compiles that information into online profiles for each person. The information it collects and compiles includes a person's name, address, age range, email address, hobbies, ethnicity, religion, photos and social media use. This is the first time that the FTC has brought an action addressing the sale of Internet and social media information in the context of employment screening.

In its complaint, the FTC asserted that Spokeo is a "consumer reporting agency" under the FCRA because it assembles consumer information for the purpose of furnishing "consumer reports" to third parties. The FTC determined that Spokeo profiles are consumer reports under the FCRA because "they bear on a consumer's character, general reputation, personal characteristics, or mode of living and/or other attributes" and are "'used or expected to be used . . . in whole or in part' as a factor in determining the consumer's eligibility for employment."

As support for the FTC's argument that Spokeo reports were used to determine employment eligibility, and thus constituted consumer reports, the FTC cited Spokeo's aggressive marketing and selling of its consumer profile information to recruiters and human resource departments in connection with employment screening. Specifically, Spokeo purchased thousands of online advertising keywords, including terms that targeted employment background checks, applicant screening, and recruiting. Spokeo also created an entire section of its website that was dedicated to recruiters and HR professionals and promoted the Spokeo URL: Spokeo.com/HR.

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Spokeo's FCRA Violations

As a consumer reporting agency under the FCRA, the FTC alleged that Spokeo violated the FCRA in the following ways:

1) Maintain Adequate Safeguards: Spokeo failed to require prospective users of Spokeo's profile information to: identify themselves to Spokeo, certify the purpose for which the information is sought, and certify that the information will be used for no other purpose.

2) Assure Accurate Information: Spokeo failed to follow any reasonable procedures to assure maximum possible accuracy of the consumer information contained in the reports it prepared.

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