The Federal Trade Commission is seeking to require a group of San Diego-based companies that provide background information on individuals to pay $5.8 million for allegedly providing inaccurate background reports to their customers.
In a complaint filed Monday in San Diego federal court, the FTC says the companies behind the TruthFinder and Instant Checkmate services failed to take steps to ensure their background reports were accurate or investigate disputes by customers who flagged the reports as inaccurate.
The FTC also alleges that the companies' marketing was misleading, with customers receiving emails and notifications "that claimed that the subject of a background report had a criminal or arrest record, when the record was merely a traffic ticket."
The "Remove" and "Flag as Inaccurate" buttons on the companies' websites also only removed disputed information for that specific user, while other customers could still view the disputed information, the FTC claims.
The complaint alleges the companies also provided background reports to those without "permissible purposes," which the law permits for certain uses such as for employment purposes or other legitimate business reasons.
Along with a $5.8 million penalty, the FTC is seeking to require the companies to take measures that would prohibit misrepresentations of their reports' accuracy, among other provisions. The FTC's proposed order still requires a judge's approval before it can go into effect.
Samuel Levine, director of the FTC's Bureau of Consumer Protection, said in a statement that "companies that compile personal information and sell background reports are on notice: Don't make false claims about the contents of your reports."
