Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: TeleCheck settles FTC charges over alleged Fair Credit Reporting Act violations, (Jan 16, 2014)

By Linda O’Brien, J.D., LL.M.

The FTC announced today that TeleCheck Services, Inc., one of the nation’s largest check authorization service companies, and its associated debt-collection entity, TRS Recovery Services, Inc., have agreed to pay $3.5 million to settle FTC charges that they violated the Fair Credit Reporting Act (FCRA) (U.S. v. TeleCheck Services, Inc., File No. 112-3183, Case No. 1:14-cv-00062).

TeleCheck, based in Houston, Texas, is a consumer reporting agency (CRA) that compiles consumers’ personal information and uses it to help retail merchants throughout the United States determine whether to accept consumers’ checks. Under the FCRA, consumers whose checks are denied based on information TeleCheck provided to the merchant have the right to dispute that information and have TeleCheck investigate and correct any inaccuracies.

In its complaint, the FTC charged that TeleCheck did not follow proper dispute procedures, including refusing to investigate disputes. The complaint also alleges that TeleCheck failed to follow reasonable procedures to assure the maximum possible accuracy of the information it provided to its merchant clients as required by the FCRA, and failed to promptly correct errors on consumers’ reports. Telecheck also engaged in acts and practices that constituted unfair or deceptive practices in violation of the FTC Act.

In addition, the complaint alleges that TRS, which handles consumer debt taken on by TeleCheck and furnishes information about consumers to TeleCheck, violated the requirements of the FTC’s Furnisher Rule, which requires entities furnishing information to CRAs to ensure the accuracy and integrity of the information provided.

The proposed consent decree to settle the FTC charges requires TeleCheck and TRS to alter their business practices to comply with the requirements of the FCRA and the Furnisher Rule. The case is part of a broader initiative to target the practices of data brokers, which often compile, maintain, and sell sensitive consumer information. Consumer reporting agencies like TeleCheck are data brokers that sell information to companies making important decisions about consumers, such as their ability to get credit or pay for goods and services by check.

“If CRAs like TeleCheck provide merchants with inaccurate information, those merchants may wrongly deny consumers the ability to buy even the most essential items, like food and medicine. The FCRA gives consumers the right to dispute and correct inaccurate information,” said Jessica Rich, Director of the Federal Trade Commission’s Bureau of Consumer Protection. “The Commission takes violations of these rights seriously.”

Companies: TeleCheck Services, Inc.; TRS Recovery Services, Inc.

News: ConsumerProtection FederalTradeCommissionNews