• 11
  • July
    2011

Atlanta collections businesses will be interested to learn about a recent case involving enforcement of the Fair Credit Reporting Act. Although collections are an important part of many businesses, businesses often need the help of commercial collections attorneys in order to comply with state and federal laws.

Businesses that engage in collection activities are regulated by the government in many important ways, including how collections can be pursued and how consumer information can be distributed. The Fair Credit Reporting Act (FCRA) controls how credit report information can be distributed, and prohibits sharing credit report information unless there is a specific permissible purpose.

Recently, the Federal Trade Commission (FTC) brought an enforcement action against Teletrack Inc. for what it believes was the improper use of credit information. Teletrack is in the business of selling credit reports to business, many of which serve financially distressed customers. These businesses rely on Teletrack's reports to determine the creditworthiness of the customers.

The FTC accused Teletrack of violating the FCRA by selling lists of customers who previously requested payday loans to other businesses that in turned used the information for marketing purposes. Allegedly, they used Teletrack's information to target potential customers.

The FTC alleged that this practice violated the FCRA because Teletrack was selling credit information for marketing purposes, and this is not considered to be a permissible purpose under the FCRA.

The FTC and Teletrack recently settled these charges. As part of their agreement, Teletrack will be required to give credit reports only to people and businesses that Teletrack reasonably believes to have a permissible purpose. In addition, Teletrack will need to pay a penalty of $1.8 million.

Source: Collections & Credit Risk, "Consumer Reporting Agency Settles FCRA Violations For $1.8M," Darren Waggoner, 6/28/2011