CFPB hits another company with hefty fine for violations of the FCRA

Clarity Services, Inc., a Florida-based credit reporting agency, agreed to pay an $8 million penalty to the Consumer Financial Protection Bureau amid allegations that the company obtained credit reports on consumers without “permissible purpose.”

Under the Fair Credit Reporting Act, access to consumer credit reports is only permitted for a “permissible purpose,” such as the use of the information for employment purposes. Clarity, who compiles consumer credit reports from third-party consumer credit reporting agencies and sells them to financial services providers, violated this clause of the FCRA when, beginning in July 2011, it began requesting consumer reports for use in the company’s marketing presentations to demonstrate the value of their reports to potential clients.

In one instance, Clarity obtained nearly 190,000 unrequested consumer credit reports from credit reporting agencies for inclusion in a presentation for a prospective client, according to the CFPB Consent Order. The inquiries made by Clarity resulted in consumers’ credit files incorrectly reflecting a permissible inquiry by a lender.

Additionally, the CFPB claims that Clarity violated the FCRA further when it refused to investigate consumer disputes, including those related to credit inquiries, even though the company was aware that information in Clarity’s consumer files was “provided by or generated by unreliable sources, including inaccurate data from furnishers,” according to the Consent Order.

The full text of the CFPB Consent Order can be found here.

Previously, the CFPB had fined two background screening firms $13 million for their failure to take basic steps to provide accurate background screening reports on job applicants. More about that case can be found here.

Source: Consumer Financial Protection Bureau, 12/3/2015

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