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Now, more than ever, consumer report information impacts the everyday life of consumers in a meaningful way. Not only are consumer reports used by creditors, but also employers, insurers, landlords, and more.
It should come as no surprise that the Fair Credit Reporting Act (FCRA) includes the potential for hefty liability, both from the actual, statutory, and punitive damages that consumers may recover through private rights of action, and from administrative enforcement actions initiated by federal and state agencies.
The FCRA governs actions of consumer reporting agencies (CRAs); users of consumer reports; and the parties that furnish information to the CRAs. This article focuses on when your entity will have a permissible purpose to obtain and use consumer report information.
Friday, May 7, 2021
On April 29, 2021, the FTC announced a $20 million settlement with Vivint Smart Home, Inc. (Vivint), a national seller of in-home security and monitoring systems, based on violations of the Fair Credit Reporting Act, the FTC Act, and the Red Flags Rule. Per the FTC, the settlement is the largest one to date for an FCRA case.
Vivint is well-known for employing a large commission-based door-to-door sales force. According to the allegations of the FTC complaint, its door-to-door sales practices exposed the company to liability. In order to complete a “new customer registration,” a Vivint sales representative must request and obtain from a credit reporting agency a consumer report to evaluate the creditworthiness of the potential customer. The FTC’s complaint details two methods employed by Vivint’s sales representatives to qualify an otherwise unqualified consumer to purchase a product.
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On March 19, 2021, Colorado State Senators Richard Rodriguez (D)
and Paul Lundeen (R) introduced Senate Bill 21-190 as part of a
bipartisan effort to make Colorado the latest state to implement
comprehensive legislation establishing certain consumer data
privacy rights. Dubbed A Bill for an Act Concerning
Additional Protection of Data Relating to Personal Privacy,
SB 21-190 largely follows in the footsteps of California s
CCPA, Virginia s CDPA and the European Union s GDPR with a
stated intent to empower consumers to protect their privacy
and require companies to be responsible custodians of data as they
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Randy Hutchinson is the president of the Better Business Bureau of the Mid-South. Reach the BBB at 800-222-8754.
I frequently write about FTC settlements with companies accused of deceptive sales practices. Few have been as ugly as one it just reached with Vivint Smart Home.
My first reaction was the company’s actions sounded like a smaller scale version of the Wells Fargo fake accounts scandal. Lo and behold, FTC Commissioner Rohit Chopra made the same comparison in a statement about the case.
Vivint is one of the largest home security and monitoring companies, with more than 1.5 million customers. It employs door-to-door salespeople, many working during the summer on a commission-only basis. Vivint’s system typically costs $1,000 or more and many customers finance the purchase. Salespeople use a proprietary system to check credit records and complete the sale.
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