In January 2022, a lead generation company that allegedly violated the federal Fair Credit Reporting Act (FCRA) by unlawfully obtaining and reselling credit scores of consumers agreed to pay $1.5 million in civil penalties and face restrictions on operations as a result of a Federal Trade Commission (FTC) lawsuit.
The FTC’s complaint claimed the lead generation company, affiliates, and owners and officers operated hundreds of websites since at least 2012 that were designed to entice consumers into sharing sensitive financial information that included their Social Security numbers (SSNs) and bank account information.
The defendants allegedly collected sensitive information from consumers under the guise of connecting them with lenders and sold that data to marketing companies. The FCRA limits the purposes for which businesses can obtain credit scores and market leads are not a permissible purpose.
The FTC alleged that 84 percent of the loan applications collected through these websites since January 2016 were not sold to lenders but disseminated to an array of marketers, debt relief and credit repair sellers, and companies that would resell consumer information without regard for how it would be used.
In addition to the civil penalty of $1.5 million, the settlement order will prohibit the defendants from making misleading statements to consumers about how their personal information will be used and also prohibit them from selling the information of consumers outside of a limited set of circumstances.
The defendants “tricked millions of people into giving up sensitive financial information and then sold it to companies that were not making loans,” Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, stated. “The company’s extraction and misuse of this data broke the law in several ways.”
ClearStar – a Hanover Investors portfolio company – is a leading provider of Human Capital Integrity℠ technology-based services specializing in background, credit, and medical screening. To learn more about ClearStar, please visit www.clearstar.net.
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