October 20, 2021

Volume XI, Number 293

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FTC: Employers Who Buy Profiles from Data Brokers to Supply Profiles on Applicants or Employees Must Comply with the FCRA

We recently released a Hot Topic that details the Federal Trade Commission's (FTC) settlement with Spokeo, Inc.  Spokeo 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) by 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.

There is an important message for employers in this settlement:  If you receive profile information from data brokers and use that information in making employment decisions, the FCRA applies.  And while this enforcement action focused on the data broker, the FTC could turn next to offending employers.  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  Employers should also check on the local state laws that may apply, because some states restrict the use of such reports for employment purposes.

© 2021 McDermott Will & EmeryNational Law Review, Volume II, Number 186
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About this Author

Jennifer S. Geetter, McDermott Will & Emery LLP, Attorney
Partner

Jennifer S. Geetter is a partner in the law firm of McDermott Will & Emery LLP and is based in the Firm's Washington, D.C., office.  She focuses her practice on emerging biotechnology and safety issues, advising hospital, industry, insurance and provider clients on matters relating to research, drug and device development, off-label use, personalized medicine, formulary compliance, privacy and security, electronic health records and data strategy initiatives, patient safety, conflicts of interest, scientific review and research misconduct, internal hospital disciplinary proceedings,...

202 756 8205
Carla A. R. Hine, Antitrust Attorney, McDermott Will Law Firm Washington DC
Partner

Carla A. R. Hine is a partner in the law firm of McDermott Will & Emery LLP and is based in the Firm’s Washington, D.C., office.  She focuses her practice on antitrust and consumer protection regulatory matters.

In her antitrust practice, Carla has significant experience counseling clients on matters relating to mergers and acquisitions, collaborations, and compliance with the Hart-Scott-Rodino (HSR) Act and international merger notification regimes.  She defends mergers and acquisitions before the U.S. antitrust agencies and international competition authorities, and has...

202 756 8095
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