FTC Fines Company $20M For FCRA Violations

The Federal Trade Commission has reached a $20 million settlement with a company accused of violating the Fair Credit Reporting Act by improperly obtaining individuals’ credit reports and the FTC’s Red Flags Rule for failing to implement an identity theft program.

The company, Vivint Smart Homes, will pay a $15 million civil penalty and $5 million to compensate individuals who were harmed by the company’s actions.

“Vivint’s sales staff stole people’s personal information to approve others for loans,” said Daniel Kaufman, Acting Director of the FTC’s Bureau of Consumer Protection, in a statement. “For misusing consumer credit reports and other sensitive data, and harming people’s credit, this company will pay $20 million.”

Employees of the company were accused of using a process known as “white paging” where the credit score of another individual with the same name as a company customer was used to qualify that individual for the company’s financing program. The company’s employees also asked customers to supply the names of people they knew who had better credit and then added their names to the application as a co-signer.

If and when those customers defaulted on their loans, the company referred the third party co-signers to a debt buyer, potentially harming the third parties credit score and subjecting them to debt collectors, according to the FTC. “Many” consumers complained to the FTC that they were subsequently victims of identity theft after being contacted by Vivint’s debt collectors, according to the FTC.

The $20 million settlement is the largest ever in a FCRA action by the FTC, the agency announced.

In a statement, FTC Commissioner Rohit Chopra, nominated to be the next director of the Consumer Financial Protection Bureau, said this enforcement action was “a step in the right direction” for the FTC, because too “many of the agency’s enforcement actions provide no help whatsoever and do nothing to deter misconduct.” Perhaps this will serve as an indicator of how Chopra intends to run the CFPB, if he is confirmed by the Senate.

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