As adage-writers go, whoever penned, “Sticks and stones will break my bones, but words will never hurt me,” should have looked for another line of work. And, the writer should have hoped that prospective employers wouldn’t spot a promotion for MyLife.com, saying they could see the writer’s criminal and sexual offender records by subscribing to MyLife’s background reports.
A lawsuit announced today alleges that MyLife.com, Inc., and its founder and CEO, Jeffrey Tinsley, enticed people to subscribe to MyLife’s background report services by posting false and misleading “teaser” background reports on MyLife’s website. The reports implied that a particular person had criminal or sex offender records that the viewer could see by subscribing to MyLife. According to the lawsuit, often, when MyLife displayed the reports, the person either had no such records or had only minor traffic citations.
The Department of Justice filed the lawsuit on behalf of the FTC. It charges that in addition to violating the FTC Act with misleading claims, MyLife violated consumer protections of the Fair Credit Reporting Act (FRCA), used misleading billing practices, in violation of the Restore Online Shoppers’ Confidence Act (ROSCA), and misrepresented its refund and cancellation policies, in violation of the Telemarketing Sales Rule (TSR). There’s a lot going on in this case. If you create, use, or are the subject of a background report (and that should include most adults), you’ll want to take a closer look.
According to the lawsuit, since 2009, MyLife has promoted its background reports by letting people search for someone’s name on its website for free and get a teaser background report. When the searched-for person had no had no history of criminal, traffic, or sex offenses, the teaser report typically said the person “may have” such records. It also prominently displayed large, clickable buttons, one inviting the user to “View [searched-for person’s] Court, Arrest, or Criminal Records,” and another inviting the user to “View [searched-for person’s] Sex Offender Records.”
The complaint alleges that the prominent “View” buttons, together with statements that the searched-for person “may have” arrest, criminal, or sex offender records, led users to conclude that the person had such records, even if they did not. Many people reported they bought subscriptions to MyLife to see the records, the complaint says.
So how does the FCRA come in? The law defines a “consumer report” as a “communication of any information” by a consumer reporting agency (CRA) that bears on a person’s “credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living” that is used (or expected to be used) as a factor in establishing their eligibility for credit, insurance, employment, or other reasons outlined in the law. The complaint alleges that MyLife is a CRA and subject to the FCRA because it assembles consumer report information, like court or arrest records, then markets and sells it to third parties to use in making decisions like whether to give someone credit, a job, or a lease.
The complaint alleges that MyLife skirted its obligations under the FCRA. It charges that MyLife failed to make sure the information it sold was used only for legally permissible purposes, failed to ensure the information was accurate, and failed to tell users about their obligations under the FCRA, including the requirement to notify consumers if the user took an adverse action against them based on information in the report. Inaccurate information in a consumer report can cost a consumer a job, housing, or even a loan.
As for MyLife’s alleged violations of ROSCA, MyLife sold its subscriptions through auto-renewing, or negative option, plans, triggering its obligations to comply with ROSCA. According to the complaint, MyLife struck out on ROSCA’s basic compliance requirements, including requirements that it clearly disclose all material terms of the deal before getting a consumer’s billing information, and that it give customers a simple mechanism for stopping the recurring charges.
The complaint charges MyLife violated the TSR by, among other things, failing to truthfully and clearly disclose the terms of its refund or cancellation policies – including that MyLife “had a policy of not making refunds and of discouraging cancellations,” according to the complaint.
The case, filed in federal court in the Eastern District of California, is worth watching. Meanwhile, if you’re a consumer reporting agency, or you use background reports, consider whether it’s time for an FCRA refresher. Start out by visiting our Business Center for resources on complying with the FCRA, including Background Checks: What Employers Need to Know.