Electronic Data Systems Corporation

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IN THE MATTER OF ELECTRONIC DATA SYSTEMS CORPORATION CONSENT ORDER , ETC. , IN REGARD TO ALLEGED VIOLATION OF SEC. 615 OF THB FAIR CREDIT REPORTING ACT AND SEC. 5 OF THE FEDERAL TRADE COMMISSION ACT Docket C- 3842. Complaint, Aug. 1991-Decision, Aug. , 1991 This consent order requires, among other things, the respondent to mail to applicants- denied employment based on a consumer report from a consumer credit reporting agency since January 1989-lette1'5 stating the reason for the denial, and the name and address of the consumer reporting agency that supplied the respondent with the report. In addition, the order requires the respondent to comply with the consumer disclosure provisions of the Fair Credit Reporting Act (FCRA) for future job applicants and to maintain various documents demonstrating compliance with the FCRA for the next five years. Appearances For the Commission: Cynthia S. Lamb and Jean Noonan. For the respondent: Richard Shlakman, Electronic Data Systems Corp. Dallas, TX. and Ronald K. Perkowski, Electronic Data Systems Corp. Herndon, VA.

COMPLAI1'T Pursuant to the provisions of the Fair Credit Reporting Act, 15 C. 1681 et seq. and the Federal Trade Commission Act, 15 U. 41 et seq. and by virtue of the authority vested in it by said Acts, the Federal Trade Commission having reason to believe that Electronic Data Systems Corporation, a corporation, hereinafter referred to as respondent, has 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:

DEFINITIO:\S For the purposes of this complaint, the following definitions are applicable. The terms "consumer consumer report " and "consumer reporting agency" shall be defined as provided in Sections 603(c), ELECTRONIC DATA SYSTBMS CORPORATION 525 524 Dccision and Order 603(d), and 603(f), respectively, of the Fair Credit Reporting Act, 15 C. 1681 , 1681a(c), 1681a(d) and 1681a(f).

P ARAGRAI'H 1. Respondent Electronic Data Systems Corporation is a corporation organized, existing and doing business under and by virtue of the laws of the State of Texas, with its office and principal place of business located at 7171 Forest Lanc, Dallas, Texas. PAR. 2. Respondent, in the ordinary course and conduct of its business, uses information in consumer reports obtained from consumer reporting agencies in the consideration, acceptance, and denial of applicants for employment with respondent. PAR. 3. The acts and practices of respondent alleged in this complaint have been in or affecting commerce, as "commerce " is defined in the Federal Trade Commission Act. PAR. 4. Respondent, in the ordinary course and conduct of its business, has denied applications or rescinded offers for employment with respondent based in whole or in part on information supplied by a consumer reporting agency, but has failed to advise consumers that the information so supplied contributed to the adverse action taken on their applications or offers for employment, and has failed to advise consumers of the name and address of the consumer reporting agency that supplied the information.

PAR. 5. By and through the use of the practices described in paragraph four, respondent has violated the provisions of Section 6J5(a) of the Fair Credit Reporting Act, 15 U. C. 1681m(a). PAR. 6. By its aforesaid failure to comply with Section 615(a) of the Fair Credit Reporting Act and pursuant to Section 621(a) thereof respondent has engaged in unfair or deceptive acts or practices in or affecting commerce in violation of Section 5(a)(1) of the Federal Trade Commission Act.

Commissioner Yao not participating.

DECISION AND ORDEIl The Federal Trade Commission having initiated an investigation of certain acts and practices of the respondent named in the caption hereof, and the respondent having been furnished thereafter with a copy of a draft of complaint which the Bureau of Consumer Protection proposed to prescnt to the Commission for its consideration, and which, if issued by the Commission, would charge respondent with Decision and Order 114 F.

violation of Section 615(a) of the Fair Credit Reporting Act and Section 5(a) of the Federal Trade Commission Act; and The respondent, its attorney, and counsel for the Commission having thereafter executed an agreement containing a consent order an admission by the respondent of all the jurisdictional facts set forth in the aforesaid draft of the complaint, a statement that the signing of said agreement is for settement purposes only and does not constitute an admission by respondent that the law has been violated as alleged in such complaint, and waivers and other provisions as required by the Commission s Rules; and The Commission having thereafter considered the matter and having determined that it had reason to believe that the respondent has 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 sixty (60) days, now in further conformity with the procedure prescribed in Section 2. 34 of its Rules, the Commission hereby issues its complaint, makes the following jurisdictional findings, and enters the following order:

1. Respondent, Electronic Data Systems Corporation, is a corporation organized, existing, and doing business under and by viltue of the laws of the State of Texas, with its office and principal place of business located at 7171 Forest Lane, Dallas, Texas. 2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondent, and the proceeding is in the public interest.

ORDBR For the purpose of this order, the terms "consumer consumer report " and "consumer reporting agency shall be defined as provided in Sections 603(c), 603(d), and 603(f), respectively, of the Fair Credit Reporting Act, 15 1.. C. 1681a(c), 1681a(d), and 1681a(f).

It is ordered That respondent, Electronic Data Systems Corporation, a corporation, its successors and assigns, and its officers, agents representatives, and employees, directly or through any corporation ELECTRONIC DATA SYSTEMS CORPORATION 527 524 Decision and Order subsidiary, division, or other device in connection with any application for employment, do forthwith cease and desist from: 1. Failing, whenever employment is denied either wholly or partly because of information contained in a consumer report from a consumer reporting agency, to disclose to the applicant for employment at the time such adverse action is communicated to the applicant (a) that the adverse action was based wholly or partly on information contained in such a report and (b) the name and address of the consumer reporting agency making the report. Respondent shall not be held liable for a violation of Section 615 of the Fair Credit Reporting Act if it shows by a preponderance of the evidence that at the time of the alleged violation it maintained reasonable procedures to assure compliance with Section 615(a) of the Fair Credit Reporting Act.

2. Failing, within ninety (90) days after the date of service of this order, to mail two (2) copies of the letter attached hereto as Appendix , completed to provide the name and address of the consumer reporting agency supplying the report and to state the reasons for the denial of employment with respondent based wholly or partly on information contained in the report, to each applicant who was denied employment by Electronic Data Systems Corporation between January 1 , 1989, and the date this order is issued, based in whole or in part on information contained in a consumer report from a consumer reporting agency, such copies of the letter to be sent first class mail to the last known address of thc applicant that is reflected in respondent' s files, and accompanied by a copy of the Federal Trade Commission brochure attached hereto as Appendix B, copies of which are to be provided by respondent. Copies of the letters attached as Appendix A need not be sent to any applicant who is denied employment with respondent during the time period specified above if lhe applicant's application file clearly shows that respondent Electronic Data Systems Corporation has previously given the applicant notification that complies in all respects with the provisions of paragraph 1. of this order.

II.

It ,:s further ordered That respondent, its successors, and assigns shall maintain for at least five (5) years and upon request make available to the Federal Trade Commission for inspection and copying, 528 FEDERAL TRADE CO),),ISSIO:\ DECISIONS Decision and Order 114 F.

documents demonstrating compliance with the requirements of Part I of this order, such documents to include, but not be limited to, all employment evaluation criteria relating to consumer reports, instructions given to employees regarding compliance with the provisions of this order all notices provided to consumers pursuant to any provisions of this order, and the complete application files for all applicants for whom consumer reports were obtained for whom offers of employment are not made or have been withheld, withdrawn, or rescinded based, in whole or in part, on information contained in a consumer report.

It is further ordered That respondent shall deliver a copy of this order at least once per year for a period of four (4) years from the date of this order, to all persons responsible for the respondent' s compliance with Section 615(a) of the Fair Credit Reporting Act. IV.

It is further ordered That respondent shall, for a period of four (4) years from the date of this order, notify the Federal Trade Commission at least thirty (30) days prior to any proposed change in the corporate structure of respondent such as dissolution, assignment or sale resulting in the emergence of a successor operation, the creation or dissolution of subsidiaries or divisions, or any other change in the corporation which may affcct compliance obligations arising out of the order.

it is further ordered That respondent shall, within one hundred twenty (120) days of service of this order, file with the Federal Trade Commission a report, in writing, setting forth in detail the manner and form in which it has complied with this order. Commissioner Yao not participating.

APPE:,TDlX A Dear Employment Applicant Our records show that sometime within the last two years ELECTROKIC DATA SYSTEMS CORPORATION 529 524 Decision and Order Electronic Data Systems Corporation denied your application for employment. The federal Fair Credit Reporting Act gives persons who are denied employment the right to know if the denial was based, in whole or in part, on information supplied by a consumer reporting agency or credit bureau and, if so, the name and address of the credit bureau.

Our records show that when we denied your application, we may not have told you that our decision was based, at least in part, on information contained in your credit report and may not have given you the reasons for our decision. The credit bureau that furnished the report is:

(Name of Consumer Reporting AgencyJ (Street AddressJ You should contact the credit bureau to learn what information is in your fie. You may obtain this information without charge if you contact the credit bureau within 30 days. An extra copy of this notice is enclosed so that you may give it to the credit bureau when you request to review your file.

The information in your credit report led us, at least in part, to deny your application for the following reason(s): no credit file unable to verify references delinquent past or present obligations with others excessive obligations in relation to income garnishment, attachment, foreclosure, repossession collection action, or judgment bankruptcy other:

A brochure explaining your rights under the federal credit laws is enclosed. If you want more information about your rights, write to the Federal Trade Commission, Division of Credit Practices, Washington C. 20580.

Thank you.

Decision and Order 114 F.T.C.

APPENDIX B APPENDIX B Fair Credit Reporting If you've ever applied for a charge account, a personal loan, insurance, or a job, someone is probably keeping a file on you. This file might contain information on how you pay your bills, or whether you've been sued, arrested, or have filed for bankruptcy. The companies that gather and sell this information are called “Consumer Reporting Agencies,” or “CRA's.” The most common type of CRA is the credit bureau. The information sold by CRA's to creditors, employers, insurers, and other businesses is called a “consumer report.” This generally contains information about where you work and live and about your bill-paying habits. —.. In 1970, Congress passed the Fair Credit Reporting Act to give consumers specific rights in ” dealing with CRA's. The Act protects you by requiring credit bureaus to furnish correct and complete information to businesses to use in evaluating your applications for credit, insurance, or a job. *; The Federal Trade Commission enforces the Fair Credit Reporting Act. Here are answers to some questions about consumer reports and CRA’:

How do I locate the CRA that has my file? If your application was denied because of information supplied by a CRA, that agency's name and address must be supplied to you by the company you applied to. Otherwise, you can find the. CRA that has your file by calling those listed in the Yellow Pages under “credit” or “credit rating and reporting.” Since more than one CRA may have a file about you, cali each one listed until you locate all agencies maintaining your file. .

Do I have the right to know what the report says? Yes, if you request it The CRA is required to tell you about every piece of information in the report and, in most cases, the sources of that information. Medical information is exempt from this rule, but you can have your physician try to obtain it for you. The CRA is not required to give you a copy of the report, although more and more are doing so. You also have the right to be told the name of anyone who received a report on you in the past six months. (If your inquiry concerns a job application, you can get the names of those who received a report during the past two years.) Is this information free? ~ Yes, if your application was denied because of information furnished by the CRA, and if you request it within 30 days of receiving the denial notice. If you dont meet these requirements, the CRA may charge a reasonable fee.

What can I do if the information is i ori P Notify the CRA. They're required to reinvestigate the items in question. If the new investigation reveals an error, a corrected version will be sent, on your request, to anyone who received your report in the past six months. (job applicants can have corrected reports sent to anyone who received a copy during the past two years.) What can I do if the CRA won't modify the report? The new investigation may not resolve your dispute with the CRA. If this happens, have the CRA late? include your version or a summary of your version of the disputed informanon in vour file and in future reports. At your request, the CRA will also show your version to anvune who recently received a F | ¥ copy of the old report. There is no charge for this service if it’s requested within 30 days after you FEDERAL TRADE COMMISSION BUREAU OF CONSUMER PROTECTION , \ ,. \(::, , , . , : , , , (, \ \ , ELECTRONIC DATA SYSTEMS CORPORATION 531 524 Decision and Order il., " II:" IILlI 'II, '', I ""1" Do J have HJ go In r..ono gr! the inlonnOltJon 11 "co, \"" 111. ' Illl' 1'11'''H' B. t II' U,-.\ II II "r"\I, h .111\ 1\ ;11", relll"' ' ' "It' " 1"1"'111. "ml.llll", \"lI f:lll': l I.! I"i: \" Ir "Ie''' ,:, ", 11111'k:III;"(,:r:1" :IW\ w:!1 ,, 1 II \"" ,I, ",, I" \:,11 W rl r'lJ' 1 :ILTI: ,,, ;11:I II' lii'''"l:I:1l 11I An report pre d on lnSUracr and job ;lppUCanl dil"rtnt? IfJ rt'rO~1 i.- rrerJrn Of' \,)" III fl" r"' ' ILl JI 111'U,Jlllt' or )uhrl'lll;il, ,)n, il I"JI' r". Jil iji '-relat lil H:'r ref1HL Tlll 'L" ;1;" " IUlll - :,'rl' . I:I:Itu Ih;ln r ;I:lr (("1,.:1"1t' rt'iH'rI.- Th lIflt'l1 111\ d\t 111:t' I,,"" \\ ,:1',(qLJ. :ll,lnct" ;,'", 1: \,1l, li(e,I"It:, ch;Jr Clll', c! rt;rt;13:"~11 l' nl,hl' r gt;IJr C\111,'J:l)L rq);J \LI illk' Il,:I:'(:c' C: III \\: ",J:;" ,, lll''' 1 con:p, (;r, J11 il (:":gJ:IH' rep,Uri ;ltJ()UT 11L'; Il,,:i"l' ",:11 :il-,) e,\pIJ::l \ Il: Ig" : I'" :1,,,1,,, . 1,itlJllnll:1i " l;nrmJ:Il)n l)()u: :1' l'X"T frum C"nlpJ I1I' IOU "ppl:t':.. , II \'Iur Jppl:CIIIOll i.; fl !tCll, !1,,\\': (:r, \'JLJ rnJI, vt n:o ()I;:Ji:l, C(lmph It' cJ!';ll )surl' h\ ' C,)l1:. II:'.\: lilt CR.- 1- nu,:,Illc 1:11111" brochufe \ole \hJ: I:1C CR,\ d,)e_, n()1 Ilj\l':O r l' \ ' ' ;J I I:" e ,, ' u c t; - ,'. 1" I: 1\ t;, \ : \:: I I 1\ L'I n I, Jr l: Jill: 11 I How long can CRA s report urUvorak information? Gti pil\ 0'1 :Ic' '" l'"I," 111::IL;:1 CJI1 r he ft:pOfCl"': ;jf1e I;',J:, "':1h ce lJln "_\Cepri 1n' tJJl1hrup' l:"" CJ:: Iw "lpn !t'l ! fur 10 I iI1f:)f:l J:ior; frp: flc':: hecJu'e nt JI1 J;J!lLicJ:ion for J iuj "'Ir!, a sJ.l:lrl, )f mo e th r. $20,000 hJ5 110Iiml'limlu'!lJ"

= Illf'W11'l:iC)."i)",lll hC CJU'C' u( J:l Jppl.cd::) more- IhJn "O,ooo won:! of crelli: (J ill,.,ur :;, I" "; 1:_11" 111111J1ll - IIl(orn1Jli",, con" Il:: iJ" 'UJI )r :udi-ment J aint IOU call he reponec tor seven 't'drS or unlilrl1e SI.l1Ult of ::n1IIJIIOL1" runs out, whiche' er i lunger Ca anyone get a copy of thc rcponr \0- I:S 0:,1\ f.l\en 10 ::'lose with J :egi:imple business need Af thert' other bw I should know about? Yes, if \()U J.ppliC'C lor :llld were cen:ed creeil, Ih Equal Credil Opponunil\ ACI require-, crediwrs 10 11011 I'OU Iht: specific reasons for \our lkni;iL For example, the creditor must 11"11 I'QU whether the dt::1 11 W;lS because \ou have ' no credit file 9.i!h a CRA or because the CM VOl' have " delinquent ob:igJ!ior, 1hi, IJ\\- JI.;o rcquir(: t:dllor to comider, upon request, additional information you might supph 3about l'Ouf credi1 hi,lrJ\ You rr,J: "ish 10 obtain the reasor, for denial frum the credilor before, au go to the credit Do women prbkms with crdJt apUcations? \!arried and formerl\'spr.arm'cJ women ma\ encounter !;rne common crediHeJa!ed problems For more inforrr, ation, write 1he FTC for a free brochure on "Women and (recit Histories" a1 the address listed be:ov:

Where should I report violaons of tht' law? Although the FTC car, t ae as lour b"Yer in pri\'a!e disputes, information about \ our experiences and cuncerns L5 ,ita I to the enforcemen1 ofthe Fair Credit Reportmg Act, Ple senC questions or nc. W'aSlllnR!On. DC 20580 I COr:p13ints to the FedenJ 'De CoIIIoJl firs Clas MAL C2(1)80 POSTAGE & FEES PAID Official Business, PenJln federa Tre Commission For Pr:"Jte l'5 BOO Permit J'u, 532 FEDERAL TRADE COMMISSION DECISIO:\S Complaint 114 F.