[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]


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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.

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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.
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    \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).
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    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