Filmdex Chex System Incorporated

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IN THE MATTER OF FILMDEX CHEX SYSTEM INCORPORATED, E;T AL.

CONSENT ORDER, ETC., IN REGARD TO ALLEGED VIOLATION 0.' THE FEDERAL TRADE COMMISSION AND FAIR CREDIT REPORTING ACTS Docket '26(j.9. Complaint, May 1975-Decision, May, 1975 Consent order requiring a Centreville, Va., credit reporting company, among other things to cease furnishing, in violation of the Fair Credit Reporting Act; such infonnation a.'; has been gathered by respondents on consumers to persons without a permissible purpose.

Appeararu;cs For the Commission: Bernrd Rawtz and Irvn E. A/rrns. For the respondents; John R. Fotey, Fotey Foley, Wash., D. COMPLAINT Pursuant to the provisions of the Federal Trdde Commssion Act and the Fair Credit Reporting Act, and by virtue of the authority vested in it by said Acts, the Federal Trade Commssion, having reason to believe that Filmdex Chex System Ineorprated, a eorpration, and Ioseph E. Slattery, individually and as an offeer of said eorpration, hereinafter sometimes referred to as respondents, have violated the provisions of said Acts, and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest hereby issues its complaint stating its charges in that respect as follows:

PARAGRAPH 1. Respondent Filmdex Chex System Ineorprated is a corporation organied, existing and doing business under and by virue of the laws of the State of Delaware, with its pricipal offee and place of business located at 15500 Lee Hwy., Centrevile, Va. Respondent Joseph E. Slattery is an offeer of the corporate respondent. He formulates, directs and controls the acts and praetiees of the corporate respondent, includig the acts and practices hereinafter set forth. His business address is the same as that of the corporate respondent.

PAR. 2. Subsequent to Apr. 25, 1971, in the ordiar course and conduct of their business, respondents have eompiled and published lists containing, among other things, the names and addresses of consumers, together with statements or indications that such eOIlumers have outstandig unpaid bils, or with statements or indications that such eonsumers have issued forged checks, eheeks drdwn upon 5B9- 7q9 0 - 70 - 57 890 EDERAL TRADE COMMISSION DECISIONS Complaint 85 F.

nonexistent accounts, or checks which have been returned by the drawee bank because of insufficient funds or other reasons. The information contained in the aforesaid lists eoncernng eonsumers whose names and addresses appear therein, bears on said consumers' credit worthiness, credit stading, credit capacity, character, general reputation, personal eharacteristies and/or mode of living. Therefore, each of the aforesaid lists constitutes a series of consumer reports as "consumer report" is defined in Section 603(d) of the Fai Credit Reporting Act.

Respondents are, and have been, for monetary fee, reguarly engaged in the practice of assembling such infonntion on eonsumers for the purpose of furshing such lists to third paries, and reguarly use a means or facility of interstate eommeree for the purpose of preparing and/or furnishing said lists. Therefore, respondents are a consumer reporting agency as "consumer reporting agency" is defined in Section 603(f) of the Fair Credit Reporting Act. PAR. 3. At the time respondents fursh the aforesaid consumer reports in list form respondents do not have reason to believe that each person to whom the consumer reports are furshed has a legitimate business need for the information in each report in connection with a business transaction involving each consumer reported upon, nor do respondents have reason to believe that each recipient otherwise intends to use the information contained in each report for a purpse set forth in Section 604 of the Fai Credit Reporting Act. Furher, the furnishing of such consumer reports is neither in response to a court order nor in accordance with the wrtten instructions of each consumer to whom the reports relate.

Therefore, respondents, in the ordiar eoure and conduct of their business, as aforesaid, fursh consumer reports to persons, as "person is defined in Section 603(b) of the Fai Credit Reporting Act, who do not have a legitimate business need or other permssible purpose to receive the consumer reports furnished to them, as required by Section 604( e) of the Act.

By furnishing consumer reports as described above, respondents have violated, and are violating, Section 604 of the Fai Credit Reporting Act.

PAR. 4. By and through the acts and pratiees described in Paragrph Three above, respondents have failed to maitan reasonable procedures to limit the furnishing of consumer reports to the purses listed under Section 604 of the Fai Credit Reporting Act, and have furnished consumer reports to persons under circumstances in which there are reasonable grounds for helieving that such reports will not be used for a purose listed in Section 604 of such Aet. Therefore, respondents 889 Decision and Order have violated, and are violating, Seetion fi07(a) of the Fair Credit Reporting Act.

PAR. 5. The acts and practices set forth in Paragraphs Thee and Four above, were, and are, in violation of the Fair Credit Reporting Act and pursuant to Section fi21(a) of that Act, said acts and practices constitute unfair or deceptive acts or practices in commerce in violation of Section 5 of the Federal Trade Commission Act. DECISION AND ORDER The Federal Trade Commission having initiated an investigation of certain acts and practices of the respondents named in the caption hereof, and the respondents having been furished thereafter with a copy of a draft of complaint which the Washington, D.C. Regional Offce proposed to present to the Commssion for its consideration and which, if issued by the Commssion, would charge respondents with violation of the Federal Trade Commission Act, and the Fai Credit Reporting Act; and The respondents and counsel for the Commssion having thereafter executed an agreement containing a consent order, an admission by the respondents of all the jurisdictional facts set forth in the aforesaid draft of complaint, a statement that the signng of said agreement is for settlement purposes only and does not constitute an admission by respondents that the law has been violated as alleged in such complaint and waivers and other provisions as required by the Commission rules; and The Commission having thereafter considered the matter and having determined that it had reason to believe that the respondents have violated the said Acts, and that complaint should issue stating its charges in that respect, and having thereupon accepted the executed consent agreement and placed such agreement on the public record for a period of sixy (fio) days, now in furher eonformty with the procedure prescribed in Seetion 2.34(b) of its rules, the Commission hereby issues its complaint, makes the following jurisdictional findings, and enters the following order:

1. Respondent Filmdex Chex System Incorprated is a corporation orgaed, existing and doing business under and by virue of the laws of the State of Delaware, with its offees and principal place of business located at 15500 Lee Hwy., Centrevie, Va.

Respondent Joseph E. Slattery is an offcer of said eorpration. He formulates, directs and controls the policies, acts and praetiees of said corpration, and his principal offee and place of business is located at the above stated address.

2. The Federal Trde Commssion has jurisdiction of the subject Decision and Order 85 :r. matter of this proceeding and of the respondents, and the proceeding is in the public interest.

ORDER It is ordered That respondents Filmdex Chex System Incorporated a corporation, its sueeessors and assigns, and its officers, and ,Ioseph E. Slattery, individually and as an offeer of said corporation, and respondents' agents, representatives, and employees, directly or through any corporation, subsidiary, division or other device, in connection with eollecting, preparation, assembling and/or furnishing of consumer reports as "consumer report" is defined in Section 608(d) of the Fair Credit Reporting Act (Pub. L. 91-508, 15 U. C. 91601 et seq. shall forthwith cease and desist from:

1. Furshing any consumer report to any person, unless such report is furished:

a. In response to the order of a eour having jursdiction to issue such order; or b. In aecordanee with the written instructions of the consumer to whom the report relates; or c. To a person which respondents then has rea.,on to believe intends, at the time the information is furshed, to use the information:

(1) In connection with a eredit transaction involving the consumer on whom the information is to be furnished and involving the extension of credit to, or review or collection of an account of, the consumer; or (2) For employment puroses; or (3) In connection with the underwting of insuranee involving the consumer; or (4) In connection with a determination of the consumer's eligibility for a license or other benefit granted by a governenta instrumentality required by law to consider an applieant' s financial responsibility or status; or (5) In connection with a business transaction involving each consumer, reported upon.

2. Furshing consumer reports in list fonn unless the identity of the consumer to whom the infonnation relates is not disclosed on such list, and cannot be determined without the use of additional information and identifeation to be provided by the consumer. Such additional information and identifcation to be provided at the time of the transaction with the user.

3. Failing to require prospective users of consumer reports to eertify the purpses for which the information in such reports is FILMDEX CHgX 8Y8Tl' INC., Kl' AL. J;i 889 Decision and Order sought, and that it will he used for no other purpose, in aeeordanee with Section 607 of the Fai Credit Reporting Aet. 4. Furishing consumer reports to any user or prospective user of such reports who does not first provide the identifeation and the eertifIeation of purpose for which information in such reports is sought as required by Section 607(a) of the Fair Credit Reporting Aet. 5. Failing to maintain reasonable procedures necessar to limit the furnishing of consumer reports to the purpose listed under Section 604 of the Act, as provided by Section 607 of the Act. 6. Failing to include the following statement on the face sheet of series of consumer reports published and distributed by respondents with such conspieuousness and clarty as is likely to be read and understood by users of such consumer reports: a. Information contained within these series of consumer reports will be used exclusively by the designated recipient or his representatives for the following permissible purposes and no other:

(1) In connection with a credit transaction involving the consumer on whom the infonnation is to be furnished and involving the extension of credit to, or review or collection of an account of, the consumer; or (2) In connection with employment purposes; or (3) In connection with the underwriting of insurance involving the consumer; or (4) In connection with a determination of the consumer s eligibilty for a license or other benefit granted by a governmental instrumentality required by law to consider an applicant's financial responsibility or status; or (5) In connection with a legitimate business need for the information in connection with a business transaction involving the consumer. b. It is understood by the users of these series of consumer reports that Pub. L. 91- 508, Section 619, states "Any person who knowingly and wilfully obtains information on a consumer from a consumer reporting agency under false pretenses shall be fined not more than $5 000 or imprisoned not more than one year, or both. It is further O'red That respondents deliver a copy ofthis order to cease and desist to all present and future personnel of respondents engaged in the prepartion and/or furishing of consumer reports, and that respondents secure a signed statement acknowledgig receipt of said order from all such personnel.

It is further ardered That the individual respondent named herein promptly notify the Commssion of the diseontinuanee of his present business or employment and of his affilation with a new business or employment. Such notice shall include respondent's eurent address and a statement as to the nature of the business or employment in which he is engaged as well as a description of his duties and responsibilties.

It is further O'red That respondents notify the Commssion at least thiy (30) days prior to any proposed change in the corporate respondent such as dissolution, assignment or sale resulting in the emergence of a successor corporation, the creation or dissolution of Order 85 F.

subsidiaries or any other change in the corporation which may effect compliance obligations arising out of the order. It is further ordered That the respondents herein shall within sixty (60) days after serviee upon them of this order, fie with the Commssion a report, in wrting, setting forth in detail the manner and form in which they have eomplied with the order to cease and desist contained herein.