Another $3.5 Million Penalty for FCRA Violations

In early 2014, the Federal Trade Commission (“FTC”) brought a complaint against one of the largest check authorization service companies in the nation, TeleCheck Services, Inc. (“TeleCheck”), and its associated debt collection entity for FCRA violations.  TeleCheck and the collection agency agreed to pay $3.5 million to settle the case.

TeleCheck is a Texas consumer reporting agency (“CRA”) that compiles consumers’ personal information and supplies it to U.S. retail merchants to aid them in their determination of whether to accept consumers’ checks.  Under the FCRA, consumers have the right to dispute the information TeleCheck provides to the merchants and have TeleCheck investigate and correct any inaccuracies if their checks were denied based on the information provided by TeleCheck.

The FTC alleged in its complaint that TeleCheck failed to follow reasonable procedures to assure maximum accuracy of the information it provided to its merchant clients and failed to timely correct mistakes in consumers’ reports.  The FTC also alleged that TeleCheck did not follow proper dispute procedures and even refused to investigate disputes. 

The complaint also included allegations against the associated collection agency, which provided information about consumers to TeleCheck.  The FTC alleged that the collection agency violated the requirements of the FTC’s Furnisher Rule, which requires entities supplying information to CRAs to ensure the accuracy of the information provided. 

TeleCheck and the associated collection agency stipulated to change their business practices going forward to comply with the FCRA requirements and the Furnisher Rule.  The stipulated payment of $3.5 million is one of the largest ever resulting from an FTC filed FCRA complaint.  Another check authorization company, Certegy Check Services, Inc., was charged with a $3.5 million fine for similar allegations earlier this year.  These cases are a part of FTC’s initiative to target practices of data brokers which help companies make decisions about consumers, such as their ability to pay for essential goods and services by check.  As Jessica Rich, the Director of FTC’s Bureau of Consumer protection commented: “If CRAs like TeleCheck provide merchants with inaccurate information, those merchants may wrongly deny consumers the ability to buy even the most essential items, like food and medicine.”

For more information about these cases or FCRA policies and regulations, please contact Joseph Messer at or (312) 334-3440.