This article first appeared in
Cyberlaw Currents, a Frankfurt Kurnit legal blog.
The Federal Trade Commission (FTC) recently warned the marketers of several mobile Apps
that they may be violating the Fair Credit Reporting Act (FCRA), a federal law
enforced by the FTC. Each of the Apps at issue include background
screening functionality.
The companies that received the warning letters are InfoPay, Inc., marketer of the Criminal Pages
app, Everify, Inc., marketer of the Police Records
App, and Intelligator, Inc., marketer of Background
Checks, Criminal Records Search, Investigate and Locate Anyone, and
People Search and Investigator Apps.
These App marketers were warned that if they have reason to
believe the background screening reports generated by their Apps
are being used for employment screening, housing, credit, or other
similar purposes, they must comply with the FCRA.
Under the FCRA, App marketers can be deemed "consumer
reporting agencies" if they provide information that relates
to an individual's character, reputation, or personal
characteristics to a third party, and such information is used or
expected to be used for employment, housing, credit or similar
purposes. Consumer reporting agencies are required by law to comply
with several different FCRA provisions, including taking reasonable
steps to ensure the maximum possible accuracy of the information
provided in consumer reports, and providing employers with certain
information about their obligations under the FCRA. The FTC
indicated that it would evaluate several factors to determine
whether an app developer had reason to believe that its app was
being used for employment or other FCRA purposes, such as
advertising placements and customer lists.
According to the warning letters, the agency has not yet made a
determination about whether the three marketers are in violation of
the FCRA. Nevertheless, in its warning letters the agency
encouraged the marketers to review their apps and policies for
compliance.
This latest action by the FTC comes on the heels of its first settlement involving mobile apps, and at
a time when other agencies have signaled their intention to increase scrutiny
of the mobile apps business. Moreover, as one FTC staffer has noted, "'App law' may be a
developing area, but savvy businesses take it as a given that
well-settled consumer protection principles carry forward as
transactions go mobile."
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Selz is not engaged herein in rendering legal advice, and shall not
be liable for any damages resulting from any error, inaccuracy, or
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Specific Questions relating to this article should be addressed directly to the author.
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