On February 6, 2012, the FTC issued a sample letter warning mobile applications marketers that their background screening applications may violate the Fair Credit Reporting Act (FCRA). According to the FTC, marketers may be considered a consumer reporting agency (CRA) under the FCRA if they furnish third parties, including employers, with consumer reports. Consumer reports:

CRAs must take reasonable steps to ensure their reports are accurate and must provide entities using those reports with information about the entities' own FCRA obligations. For example, CRAs must notify employers using consumer reports that they must provide employees or applicants with notice of any adverse employment action taken because of the reports.

The FTC stated that both mobile applications marketers and their customers must comply with the FCRA if they have reason to believe their reports are used for employment or other FCRA purposes, regardless of any disclaimers on the marketers' websites stating the reports should not be used for employment or other FCRA purposes. Employers using these mobile applications for background screening of employees or job applicants should ensure they comply with the FCRA even if the applications' marketers claim the FCRA is not applicable. Mobile application developers should also be aware of the FCRA's requirements when offering applications that would allow employers and other third parties to conduct background checks on individuals.

The sample letter is based on letters the FTC issued to three mobile applications marketers. In a February 7, 2012 press release, the FTC identified both the mobile applications that prompted these letters and the applications' marketers.

For more information on the FCRA, see Practice Note, Background Checks and References.