JUSTICE ALLEGES 3 COMPANIES VIOLATED FAIR CREDIT REPORTING ACT

FROM: U.S. DEPARTMENT OF JUSTICE

Thursday, October 11, 2012
Justice Department Files Lawsuit Against Three Related Companies for Violating Fair Credit Reporting Act

The United States has filed a complaint against three related companies that bought and sold consumer credit reports, the Justice Department announced today. The government’s complaint charges these companies with violating the Fair Credit Reporting Act (FCRA). The companies have agreed to pay a $1.2 million civil penalty to resolve these charges.

In a complaint filed Oct. 9, 2012, the United States alleged that Direct Lending Source Inc., and Bailey & Associates Advertising Inc., both Florida corporations, Virtual Lending Source LLC, based in San Diego, Calif., and the principals of all of these entities, Robert M. Bailey, Jr. and Linda Giordiano , violated the FCRA by failing to comply with provisions forbidding the sale of credit reports without a "permissible purpose." The complaint alleges that the defendants purchased thousands of "pre-screened" consumer lists, or collections of credit report data. The only permissible purpose under the Act for using such prescreened lists is to make "firm offers of credit or insurance" to consumers. However, the complaint alleges that the defendants re-sold the lists to dealers who marketed loan modification, debt relief and credit repair services rather than making firm offers of credit. According to the complaint, some of the dealers who purchased the defendants’ credit report data have become the subject of law enforcement actions or warnings involving fraud committed against consumers in financial trouble.

The complaint also alleges that the defendants did not take reasonable steps to identify the ultimate purchasers of the credit reports. In some cases, according to the complaint, the defendants sold lists to brokers who then re-sold them to unidentified entities.

"The sensitive financial information in credit reports must be protected from those who would use it to target vulnerable consumers for sham offers," said Stuart Delery, Acting Assistant Attorney General for the Civil Division. "We will work with the Federal Trade Commission to aggressively enforce the laws that safeguard these reports."

Along with the $1.2 million civil penalty, the defendants agreed to injunctions against future FCRA and FTC violations in a proposed consent decree that must be approved by the court. The proposed order would prohibit the defendants from using, obtaining or reselling consumer reports for unauthorized purposes. The proposed order also would prohibit the defendants from selling consumer reports in connection with solicitations for debt relief and mortgage relief services that charge advance fees.

The Federal Trade Commission (FTC), which oversees the FCRA, referred the case to the Department. The lawsuit, United States v. Direct Lending Source et al., was filed in the Southern District of California.

Acting Assistant Attorney General Delery thanked the FTC for referring this matter to the Department. The Consumer Protection Branch of the Justice Department’s Civil Division brought the case on behalf of the United States.

EMPLOYMENT SCREENER WILL PAY $2.6 MILLION TO SETTLE FAIR CREDIT REPORTING ACT CHARGES

FROM: U.S. DEPARTMENT OF JUSTICE
Wednesday, August 8, 2012
Employment Screening Services Provider Settles Charges of Violating Fair Credit Reporting Act
Oklahoma-based Company Agrees to Pay U.S. $2.6 Million Penalty

A company that marketed public records about consumers to employers making hiring decisions agreed to settle charges that it violated the Fair Credit Reporting Act and pay $2.6 million in civil penalties , the Justice Department announced.

In a complaint filed today, the United States alleged that HireRight Solutions Inc., an Oklahoma corporation based in Tulsa, Okla., violated the Fair Credit Reporting Act (FCRA) by failing to comply with FCRA provisions designed to ensure the accuracy of background reports about potential employees. HireRight combined public information, including court records, into profiles provided to thousands of employers considering consumers for jobs, primarily in the trucking industry. The complaint alleges that poor quality control led HireRight to include erroneous and duplicate information in its reports. The complaint also alleges that HireRight failed to provide consumers timely access to the information in their own files and did not appropriately conduct investigations of disputed items when requested.

"Inaccurate consumer reports can keep qualified applicants from finding work and keep employers from finding good employees," said Stuart Delery, Acting Assistant Attorney General for the Civil Division. "In this age of increased collection and distribution of consumer information, aggressive enforcement of the FCRA ensures that these reports contain facts, not mistakes."

Along with the $2.6 million civil penalty, HireRight agreed to injunctions against future FCRA and Federal Trade Commission (FTC) Act violations in a proposed consent decree filed with the complaint. The consent decree also requires HireRight to maintain reasonable procedures to ensure the accuracy of reports and, upon request, to provide consumers the information in their files, such as criminal history reports. Access to these reports ensures that the consumers can dispute erroneous criminal history information that would substantially interfere with their ability to obtain a job.

The FTC, which oversees the FCRA, referred the case to the Justice Department. The lawsuit, United States v. HireRight Solutions Inc., was filed in the District of the District of Columbia.

Acting Assistant Attorney General Delery thanked the Federal Trade Commission for referring this matter to the Department. The Consumer Protection Branch of the Justice Department’s Civil Division brought the case on behalf of the United States.