Data broker Spokeo, Inc. settles with the Federal Trade Commission.

Spokeo, Inc. collected information about individuals from online and offline sources to create profiles that included contact information, marital status, age range and in some cases included a person’s hobbies, ethnicity, religion, participation on social networking sites and photos that Spokeo attributed to a particular individual. Spokeo marketed these profiles to companies in the human resources, background screening and recruiting industries as information to serve as a factor in deciding whether to interview or hire a job candidate. The FTC concluded that Spokeo acted as a consumer reporting agency and thus violated the Fair Credit Reporting Act (FCRA) by (1) failing to ensure the consumer reports it sold were used for legally permissible purposes (2) failing to ensure that the information it sold was accurate, and (3) failing to inform users of Spokeo's consumer reports of their obligations under the FCRA. Spokeo agreed to pay $800,000 and comply with the FCRA going forward, among other things.

The message to employers with this settlement is: If you receive profile information from data brokers and use that information in making employment decisions, the FCRA applies. Although this enforcement action was directed to the data broker, the FTC could next go after the employer. The FTC has published guidance on how to avoid an enforcement action in these circumstances and comply with the FCRA at: Using Consumer Reports: What Employers Need to Know, also employers should be aware of the local and state laws that may apply.

Aurico provides our clients with sample forms, guidance and information to help you comply with the FCRA and state laws. Aurico recommends employers seek legal counsel and review their polices on an annual basis to assure continued compliance with the FCRA, EEOC and state-specific laws and regulations.