Skip to Content

Using Information from Data Brokers? Beware the FCRA and the FTC …

As sellers and Internet service providers gather increasing amounts of consumer information, the data broker industry has expanded. Identifying themselves as "market research" firms, data brokers buy, analyze, sort, aggregate, and resell public and non-public information and analytics about consumers to companies that use the data to target their marketing efforts.

But the Federal Trade Commission (FTC), which enforces the Fair Credit Reporting Act (FCRA), takes the position that these data brokers are consumer reporting agencies (CRAs) regulated by the FCRA. The FCRA defines a CRA to include anyone who "regularly engages in assembling or evaluating credit or other consumer information" for the purpose of furnishing "consumer reports" to third parties, by means of interstate commerce. "Consumer reports" are broadly defined to include "any information" "communicated by" a CRA relating to "general reputation, personal characteristics, or mode of living" that may serve "as a factor" in establishing the consumer’s eligibility for credit, insurance, or employment.

The FTC aggressively pursues enforcement against key players in the credit reporting system: CRAs, furnishers of information, and consumer report users. In recent years it has sued and assessed millions of dollars in penalties against data brokers that sell information about consumers, including Instant Checkmate, InfoTrack, and Choice Point. According to FTC complaints, these companies operated as CRAs but violated the FCRA by, among other things, providing inaccurate information about consumers, and failing to screen prospective subscribers before selling them sensitive consumer information.

The FCRA also requires users of consumer reports to provide the consumer with notice of any "adverse action" taken on the basis of information contained in the report, including denial of credit or eligibility for insurance. Companies that use information purchased from data brokers or "market research" companies as "a factor in determining eligibility" for extension of credit or insurance should be aware that they may be subject to adverse action notice requirements under the FCRA.

The FTC has called for more transparency and accountability on the part of data brokers, and recently recommended to Congress that it consider legislation requiring data brokers to provide consumers information about the data they collect, access to their data, and the ability to opt out of having it shared for marketing purposes:

Related Practices
Consumer Finance
©2024 Carlton Fields, P.A. Carlton Fields practices law in California through Carlton Fields, LLP. Carlton Fields publications should not be construed as legal advice on any specific facts or circumstances. The contents are intended for general information and educational purposes only, and should not be relied on as if it were advice about a particular fact situation. The distribution of this publication is not intended to create, and receipt of it does not constitute, an attorney-client relationship with Carlton Fields. This publication may not be quoted or referred to in any other publication or proceeding without the prior written consent of the firm, to be given or withheld at our discretion. To request reprint permission for any of our publications, please use our Contact Us form via the link below. The views set forth herein are the personal views of the author and do not necessarily reflect those of the firm. This site may contain hypertext links to information created and maintained by other entities. Carlton Fields does not control or guarantee the accuracy or completeness of this outside information, nor is the inclusion of a link to be intended as an endorsement of those outside sites.


The information on this website is presented as a service for our clients and Internet users and is not intended to be legal advice, nor should you consider it as such. Although we welcome your inquiries, please keep in mind that merely contacting us will not establish an attorney-client relationship between us. Consequently, you should not convey any confidential information to us until a formal attorney-client relationship has been established. Please remember that electronic correspondence on the internet is not secure and that you should not include sensitive or confidential information in messages. With that in mind, we look forward to hearing from you.