Credit reporting agency Teletrack, which specializes in subprime credit reports, has been fined by the FTC for selling credit reports illegally. The agency was found to have sold credit reports to payday loan lenders and has to pay $1.8 million in fines to the Federal Trade Commission.
Company cited for selling credit reports for marketing purposes
The Federal Trade Commission has slapped credit rating agency Teletrack with $1.8 million in fines for illegally selling credit reports to payday loan companies for marketing purposes, according to WalletPop. Teletrack has agreed to pay the fines, but insists that it acted entirely within the law. The FTC says the company violated the Fair Credit Reporting Act, which prohibits the selling of financial information such as credit histories or borrowing habits of customers or similar information for any reason other than a “permissible purpose,” according to Statesboro Business and Lifestyle Magazine. Marketing is not a permissible purpose.
Huge presence in subprime credit market
Teletrack is one of the largest subprime credit reporting agencies. It reports the credit history and activities of hundreds of thousands of people who use subprime credit products. Also known as alternative financial services, Teletrack compiles data on people who borrow payday loans, purchase furniture through rent-to-own companies, use car title loans or get an auto loan through non-prime lenders. The FCRA doesn’t prevents companies like Teletrack from providing information when asked for a credit check and paid by a second party, but selling information to third parties for non-approved purposes is grounds for an FTC lawsuit, according to Forbes.
New rules for credit scores
Until the past few years, it was fairly difficult for consumers to obtain much information about their credit history or learn about how that information is being shared with their creditors or third parties. Part of the financial reform laws of the past few years include new rules and regulations concerning credit reporting and credit scores, according to NASDAQ. The Dodd-Frank Act created the new rules last year, and the Federal Trade Commission and the Federal Reserve are implementing them this year. Now, any creditor that uses a credit score as a factor in creating the terms of a loan must tell consumers what their credit scores are.