[Federal Register Volume 77, Number 201 (Wednesday, October 17, 2012)]
[Notices]
[Pages 63833-63835]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-25563]
=======================================================================
-----------------------------------------------------------------------
FEDERAL TRADE COMMISSION
[File No. 102 3252]
Equifax Information Services LLC; Analysis of Proposed Consent
Order To Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed Consent Agreement.
-----------------------------------------------------------------------
SUMMARY: The consent agreement in this matter settles alleged
violations of federal law prohibiting unfair or deceptive acts or
practices or unfair methods of competition. The attached Analysis to
Aid Public Comment describes both the allegations in the draft
complaint and the terms of the consent order--embodied in the consent
agreement--that would settle these allegations.
DATES: Comments must be received on or before November 9, 2012.
ADDRESSES: Interested parties may file a comment at https://ftcpublic.commentworks.com/ftc/equifaxinfoservicesconsent online or on
paper, by following the instructions in the Request for Comment part of
the SUPPLEMENTARY INFORMATION section below. Write ``Equifax Info
Services, File No. 102 3252'' on your comment and file your comment
online at https://ftcpublic.commentworks.com/ftc/equifaxinfoservicesconsent, by following the instructions on the web-
based form. If you prefer to file your comment on paper, mail or
deliver your comment to the following address: Federal Trade
Commission, Office of the Secretary, Room H-113 (Annex D), 600
Pennsylvania Avenue NW., Washington, DC 20580.
FOR FURTHER INFORMATION CONTACT: Katherine Armstrong (202-326-3250),
FTC, Bureau of Consumer Protection, 600 Pennsylvania Avenue NW.,
Washington, DC 20580.
SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 16 CFR 2.34,
notice is hereby given that the above-captioned consent agreement
containing a consent order to cease and desist, having been filed with
and accepted, subject to final approval, by the Commission, has been
placed on the public record for a period of thirty (30) days. The
following Analysis to Aid Public Comment describes the terms of the
consent agreement, and the allegations in the complaint. An electronic
copy of the full text of the consent agreement package can be obtained
from the FTC Home Page (for October 10, 2012), on the World Wide Web,
at http://www.ftc.gov/os/actions.shtm. A paper copy can be obtained
from the FTC Public Reference Room, Room 130-H, 600 Pennsylvania Avenue
NW., Washington, DC 20580, either in person or by calling (202) 326-
2222.
You can file a comment online or on paper. For the Commission to
consider your comment, we must receive it on or before November 9,
2012. Write ``Equifax Info Services, File No. 102 3252'' on your
comment. Your comment B including your name and your state B will be
placed on the public record of this proceeding, including, to the
extent practicable, on the public Commission Web site, at http://www.ftc.gov/os/publiccomments.shtm. As a matter of discretion, the
Commission tries to remove individuals' home contact information from
comments before placing them on the Commission Web site.
Because your comment will be made public, you are solely
responsible for making sure that your comment does not include any
sensitive personal information, like anyone's Social Security number,
date of birth, driver's license number or other state identification
number or foreign country equivalent, passport number, financial
account number, or credit or debit card number. You are also solely
responsible for making sure that your comment does not include any
sensitive health information, like medical records or other
individually identifiable health information. In addition, do not
include any ``[t]rade secret or any commercial or financial information
which * * * is privileged or confidential,'' as discussed in Section
6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR
4.10(a)(2). In particular, do not include competitively sensitive
information such as costs, sales statistics, inventories, formulas,
patterns, devices, manufacturing processes, or customer names.
If you want the Commission to give your comment confidential
treatment, you must file it in paper form, with a
[[Page 63834]]
request for confidential treatment, and you have to follow the
procedure explained in FTC Rule 4.9(c), 16 CFR 4.9(c).\1\ Your comment
will be kept confidential only if the FTC General Counsel, in his or
her sole discretion, grants your request in accordance with the law and
the public interest.
---------------------------------------------------------------------------
\1\ In particular, the written request for confidential
treatment that accompanies the comment must include the factual and
legal basis for the request, and must identify the specific portions
of the comment to be withheld from the public record. See FTC Rule
4.9(c), 16 CFR 4.9(c).
---------------------------------------------------------------------------
Postal mail addressed to the Commission is subject to delay due to
heightened security screening. As a result, we encourage you to submit
your comments online. To make sure that the Commission considers your
online comment, you must file it at https://ftcpublic.commentworks.com/ftc/equifaxinfoservicesconsent by following the instructions on the
web-based form. If this Notice appears at http://www.regulations.gov/#!home, you also may file a comment through that Web site.
If you file your comment on paper, write ``Equifax Info Services,
File No. 102 3252'' on your comment and on the envelope, and mail or
deliver it to the following address: Federal Trade Commission, Office
of the Secretary, Room H-113 (Annex D), 600 Pennsylvania Avenue NW.,
Washington, DC 20580. If possible, submit your paper comment to the
Commission by courier or overnight service.
Visit the Commission Web site at http://www.ftc.gov to read this
Notice and the news release describing it. The FTC Act and other laws
that the Commission administers permit the collection of public
comments to consider and use in this proceeding as appropriate. The
Commission will consider all timely and responsive public comments that
it receives on or before November 9, 2012. You can find more
information, including routine uses permitted by the Privacy Act, in
the Commission's privacy policy, at http://www.ftc.gov/ftc/privacy.htm.
Analysis of Agreement Containing Consent Order To Aid Public Comment
The Federal Trade Commission has accepted, subject to final
approval, a consent agreement from Equifax Information Services LLC
(``Equifax'').
The proposed consent order has been placed on the public record for
thirty (30) days for receipt of comments by interested persons.
Comments received during this period will become part of the public
record. After thirty (30) days, the Commission will again review the
agreement and the comments received, and will decide whether it should
withdraw from the agreement and take appropriate action or make final
the agreement's proposed order.
According to the Commission's proposed complaint Equifax is a
``consumer reporting agency'' (``CRA'') that sells ``prescreened
lists,'' which are lists of consumers that meet certain pre-selected
criteria such as consumers who were, among other things, 30, 60, or 90
days late on their mortgage payments. Such prescreened lists are
``consumer reports'' because information such as whether a consumer is
30, 60, or 90 days late on a mortgage payment bears on, among other
things, a consumer's credit worthiness and credit standing and is used
or expected to be used as a factor in determining a consumer's
eligibility for credit. The only permissible purpose under the Fair
Credit Reporting Act (``FCRA'') for using a prescreened list is to make
a ``firm offer of credit or insurance.'' A firm offer of credit is one
that will be honored, subject to limited exceptions, if the consumer
continues to meet the selection criteria.
First, the Commission's proposed complaint alleges that Equifax
violated Section 604(c) of the FCRA by furnishing consumer reports to
persons that it did not have reason to believe had a permissible
purpose to obtain a consumer report. The proposed complaint alleges
that from January 1, 2008 through early 2010, Equifax sold prescreened
lists to Direct Lending Source, Inc. or its affiliates, Bailey &
Associates Advertising, Inc. and Virtual Lending Source, LLC
(collectively ``Direct Lending'') which included, among other things,
consumers' credit scores and whether they were 30, 60, or 90 days late
on their mortgage payments. The proposed complaint further alleges that
in many instances, Direct Lending did not have a permissible purpose to
obtain consumer reports under the FCRA but rather, Direct Lending used
and sold these lists for the purpose of marketing products and services
to consumers in financial distress. For example, the complaint alleges
Direct Lending sold lists to marketers for the purpose of targeting
consumers in financial distress for loan modification, debt relief, and
foreclosure relief services.
Second, the proposed complaint alleges that Equifax violated
Section 607(a) of the FCRA by failing to maintain reasonable procedures
to limit the furnishing of consumer reports to the purposes listed
under section 604(c) of the FCRA, failing to make reasonable efforts to
verify the identity of each new prospective user of consumer report
information, and failing to make reasonable efforts to verify the uses
certified by each prospective user prior to furnishing such user a
consumer report. According to the proposed complaint, Equifax failed to
maintain reasonable procedures to limit the furnishing of the
prescreened lists it sold to Direct Lending by: (1) Failing to
investigate promptly or fully on certain occasions when it learned that
Direct Lending was violating Equifax's internal policies relating to
prescreening; and (2) furnishing prescreened lists to Direct Lending
although it knew or should have known that Direct Lending resold the
prescreened lists, in multiple instances, without identifying the end
user to Equifax. The complaint alleges that, given Direct Lending's
failures, Equifax had reason to believe that the entities to whom its
prescreened lists were being sold did not have a permissible purpose
for obtaining the lists. Nonetheless, Equifax continued to sell
prescreened lists to Direct Lending. The proposed complaint further
alleges that Equifax provided prescreened lists to Direct Lending
through an online portal and also provided access to the portal to
third parties in connection with Direct Lending's prescreening
operations, but did not make reasonable efforts to verify the identity
of these entities, and accordingly, could not ensure that these
entities would only use the lists for a permissible purpose.
Finally, the proposed complaint also alleges Equifax violated
Section 5(a) of the FTC Act by failing to employ reasonable and
appropriate measures to control access to the sensitive consumer
financial information it maintains and sells for prescreening services.
The complaint alleges that Equifax's failures resulted in prescreened
lists being sold to a number of entities that were ultimately the
subject of actions or warnings by law enforcement and that Equifax's
lack of reasonable procedures caused or is likely to cause substantial
consumer injury that is not reasonably avoidable by consumers and is
not outweighed by benefits to consumers or competition.
The proposed order contains provisions designed to prevent Equifax
from engaging in the future in practices similar to those alleged in
the complaint.
Part I of the proposed order prohibits Equifax from: (1) Furnishing
a prescreened list to any person which Equifax does not have reason to
believe has a permissible purpose under section 604(c) of the FCRA; (2)
failing to maintain reasonable procedures designed to limit the
furnishing of prescreened lists to the purposes listed
[[Page 63835]]
under section 604(c) of the FCRA; and (3) furnishing consumer reports
pursuant to section 604(c) of the FCRA, in connection with
solicitations for debt relief products or services, or mortgage
assistance relief products or services offered by entities that
respondent has reasonable grounds for believing charge advance fees for
such services, unless: (a) The product or service is the refinancing of
a dwelling loan; or (b) the entity offering the product or service is
an attorney.
Part II of the proposed order requires Equifax to pay $392,803 in
disgorgement.
Part III through VII of the proposed order are reporting and
compliance provisions. Part III requires that Equifax retain for a
period of five (5) years: (1) Files containing the names, addresses,
telephone numbers, and all certifications made by persons seeking to
obtain prescreened lists from Equifax in order to finance the product
or service provided by a third party, and all materials considered by
Equifax in connection with its verification of the identity of those
persons and verification of the certifications made by those persons;
(2) copies of all training materials and marketing materials that
relate to Equifax's prescreening activities as alleged in the complaint
and Equifax's compliance with the provisions of this order; and (3) all
records necessary to demonstrate full compliance with each provision of
this order, including all submissions to the Commission.
Part IV requires dissemination of the order now and in the future
to principals, officers, directors, and managers, and to all current
and future employees, agents, and representatives having
responsibilities relating to the subject matter of the order. Part V
ensures notification to the FTC of changes in corporate status. Part VI
mandates that Equifax submit an initial compliance report to the FTC
and make available to the FTC subsequent reports. Part VII is a
provision ``sunsetting'' the order after twenty (20) years, with
certain exceptions.
The purpose of the analysis is to aid public comment on the
proposed order. It is not intended to constitute an official
interpretation of the proposed order or to modify its terms in any way.
By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2012-25563 Filed 10-16-12; 8:45 am]
BILLING CODE 6750-01-P