On September 11, 2023, the Federal Trade Commission (FTC) announced that it had filed a proposed order against Instant Checkmate, LLC, TruthFinder, LLC, the Control Group Media Company LLC, Interlicare Direct LLC, and PubRec LLC, (collectively, the defendants) for violation of the Federal Trade Commission Act (FTC Act) and Fair Credit Reporting Act (FCRA) following a complaint.

Background to the case

In particular, the FTC explained that Instant Checkmate and TruthFinder, which sell background reports on their websites InstantCheckmate.com and TruthFinder.com respectively, allow users to run background searches using an individual's name and, optionally, city and state of residence. Background reports may include name, date of birth, home and cell phone numbers, address history, relatives, arrest and criminal records, government license information, social media or dating profiles, and email addresses.

The FTC clarified that in 2017 the defendants were owned by the same holding company and that since 2018 PubRec has wholly owned the other companies. The FTC alleges that the defendants acted as a common enterprise and, accordingly, each is jointly and severally liable for the committed acts and practices.

Findings of the FTC

The FTC determined that Instant Checkmate's and TruthFinder's claim that background reports contained 'the most accurate information available to the public' lacked a reasonable legal basis. Specifically, the FTC outlined that the defendants did not know and made no effort to verify whether the information they received from their third-party service providers was accurate or current, and made no effort to verify, investigate, or correct reported inaccuracies.

Regarding criminal background reports, the FTC noted that Instant Checkmate and TruthFinder made representations that searched-for individuals have or may have criminal and/or arrest records that were false or contained only non-criminal traffic records. Further, only after purchasing a subscription to Instant Checkmate or TruthFinder were individuals able to view the information in background reports despite such representations.

The FTC found that although Instant Checkmate and TruthFinder seemingly allowed subscribers to remove inaccurate information on background reports, removed items continued to remain visible to other customers who searched for the same individual.

Outcomes

In light of the above, the FTC found that the defendants had violated Section 5(a) of the FTC Act and Sections 604(a), 604(b), 607(a), 607(b), 607(d), and 611(a)(1)(A) of the FCRA, and consequently required the defendants to pay $5.8 million.

In addition to payment, the FTC's proposed order requires the defendants to not advertise, market, promote, or offer for sale any report unless they first establish and implement, and thereafter maintain, a comprehensive monitoring program to assess whether each defendant is operating in whole or in part as a consumer reporting agency as defined under the FCRA.

You can read the press release here, the complaint here, and the proposed order here.