The FTC announced that it entered into a settlement with a consumer reporting agency charged with improperly selling prescreened lists of consumers who were late on mortgage payments, in violation of the FTC Act and the Fair Credit Reporting Act. Specifically, the FTC alleged that the CRA: (1) sold the prescreened lists to a company that did not have a legally “permissible purpose” to obtain the prescreened lists; (2) did not have appropriate controls in place to determine whether a permissible purpose existed; and (3) failed to properly investigate once it learned that the company was violating the CRA’s internal policies on prescreening. The FTC also brought charges against the company, alleging, among other things, that the company resold the lists to third parties who did not have a permissible purpose, and also failed to notify the CRA of the end users of the lists.
The settlement provides that the CRA will pay $393,000 and is prohibited from: (1) furnishing prescreened lists to anyone that it does not have reason to believe has a permissible purpose to receive the lists; (2) failing to maintain reasonable procedures to limit the furnishing of prescreened lists to anyone except those with a permissible purpose; and (3) selling prescreened lists in connection with offers for debt and/or mortgage assistance relief products or services, when advanced fees are charged. A final judgment against the company also prohibits conduct, such as using or obtaining consumer reports without a permissible purpose, and requires the company to pay $1.2 million. The FTC published an analysis of the consent agreement and will publish a description of the proposed settlement in the Federal Register shortly for public comment. Comments must be submitted by November 9, 2012.