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Stupid FTC Watch: Let the Show Trial Begin

5/14/13

By Ken Magill

The Federal Trade Commission last week sent letters to 10 so-called data brokers warning that their practices may violate the Fair Credit Reporting Act.

Each letter clearly states the FTC hasn’t evaluated the companies’ practices. However, the attorneys with not nearly enough to do at the FTC spent our money crafting and sending threat letters anyway.

This episode will certainly not end with these letters and you should be outraged.

For one thing, unsolicited contact from the federal government can have only one of two possible outcomes: nothing, or something bad. Warning letters from the FTC are serious.

What’s more, government bureaucrats earn points by taking scalps, not by simply sending warning letters.

These particular warning letters were sent as the result of an undercover “test-shopper operation” where “FTC staff members posed as individuals or representatives of companies seeking information about consumers to make decisions related to their creditworthiness, eligibility for insurance or suitability for employment,” the FTC said in a release.

“Of the 45 companies contacted by FTC staff in the test-shopper operation, ten appear to violate the FCRA by offering to provide the information without complying with the law’s requirements,” the release continued.

The ten companies receiving the warning letters from the FTC include:

• Two companies the FTC claimed “appeared” to offer pre-screened lists of consumers for use in making firm offers of credit: ConsumerBase and one additional company;
• Two companies the FTC claimed “appeared” to offer consumer information for use in making insurance decisions: Brokers Data and US Data Corporation; and
• Six companies the FTC claimed appeared to offer consumer information for employment purposes: Crimcheck.com, 4Nannies, U.S. Information Search, People Search Now, Case Breakers, and USA People Search.

A federal agency publishing the names of companies and claiming they “appear” to be violating federal law is deadly serious business.

Yet, each letter to each company clearly states: “At this time, we have not evaluated your company’s practices to determine whether they comply with the FCRA. However, we encourage you to review your products and services, as well as your policies, employee training, and other procedures for compliance.”

Folks, this is the beginning of a show trial. There is no way FTC staffers wrote these letters expecting them to result in simple product and policy reviews and end there. These letters are a precursor to an FTC rationalization of force.

And the letters are only what the FTC is doing in public.

At some point there will be an announcement from the FTC that one, some or all of these companies have settled charges with the FTC for some piddling amount like $50,000 each, while admitting no wrongdoing.

The companies will be gagged. We will never get their side of the story. The FTC will crow about protecting consumers from some cooked-up privacy boogeyman.

And the puzzle whose completion means the end of data-driven marketing will have one more piece locked in place.

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