TeleCheck and collection agency settle FCRA charges for $3.5 million


The Federal Trade Commission announced Thursday that check authorization company TeleCheck Services, Inc. and its affiliate debt collection agency, TRS Recovery Services, Inc., will pay $3.5 million to settle charges of having violated the Fair Credit Reporting Act (FCRA).

Houston-based TeleCheck is a consumer intelligence agency (CRA) that compiles consumers’ personal information and uses it to help retail merchants across the United States determine whether they will accept consumer checks. Under the FCRA, consumers whose checks are dishonored based on information provided by TeleCheck to the merchant have the right to dispute that information and have TeleCheck investigate and correct any inaccuracies.

The FTC Complaint alleges, among other things, that TeleCheck failed to follow proper dispute resolution procedures, including refusing to investigate disputes. The complaint also alleges that TeleCheck failed to follow reasonable procedures to ensure the maximum possible accuracy of information provided to its merchant customers, as required by the FCRA, and failed to promptly correct errors on consumer reports. .

In addition, the complaint alleges that affiliated collection agency TRS, which handles consumer debt incurred by TeleCheck and provides consumer information to TeleCheck, violated the requirements of the FTC’s Vendor Rule, which requires entities providing information to rating agencies to ensure the accuracy and integrity of the information provided.

“If credit rating agencies like TeleCheck provide merchants with inaccurate information, those merchants can wrongly deny consumers the ability to purchase even the most essential items, like food and medicine. The FCRA gives consumers the right to dispute and correct inaccurate information,” said Jessica Rich, director of the Federal Trade Commission’s Office of Consumer Protection. “The Commission takes violations of these rights seriously.

order the FTC fee settlement requires TeleCheck and TRS to change their business practices to comply with FCRA and Vendor Rule requirements in the future. This case is part of a larger initiative to target the practices of data brokers, who often compile, store and sell sensitive consumer information. Consumer reporting agencies like TeleCheck are data brokers that sell information to businesses that make important decisions about consumers, such as their ability to obtain credit or pay for goods and services by check.

The FTC said the penalty is the second-largest ever obtained by the FTC in an FCRA case. Last year, another check authorization company, Certegy Check Services, Inc., agreed to pay a $3.5 million fine to settle FTC allegations similar to those made against TeleCheck.


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