Company furnishes credit reports for marketing purposes

The Federal Trade Commission recently alleged that consumer credit information bureau Teletrack violated the Fair Credit Reporting Act by selling credit reports to marketers. Teletrack sold the reports to short term lenders and other businesses that primarily serve customers with unsteady financial situations. The companies use Teletrack's reports to determine whether to provide credit to customers. However, the FTC claimed that Teletrack constructed a marketing database from the compiled credit information and sold it to marketing agencies. The FTC believes this action violated the FCRA because the lists contained information about a consumer's "credit worthiness." Additionally, it's illegal to sell credit reports without a "permissible purpose," which marketing does not fall under. "The fact that a consumer has applied for a short term loan is credit report information protected by the FCRA," said FTC Bureau of Consumer Protection director David Vladeck. "The FCRA says a credit reporting agency like Teletrack can't sell a consumer’s sensitive credit report information for mere sales pitches." The two sides reached a settlement which requires Teletrack to pay $1.8 million as a civil penalty. The agreement also contains specific record-keeping requirements to ensure the company will remain in compliance in the future.