Teletrack Must Face FCRA Class Action Lawsuit

A federal judge has ruled that credit-reporting company Teletrack must face a class action lawsuit claiming it violated the Fair Credit Reporting Act by selling consumers’ personal information to third parties.

Teletrack specializes in providing credit reports to high-risk businesses such as payday lenders, high-interest lenders, rental-purchase stores and no-prime auto lenders. These businesses provide Teletrack with personal information about the consumer they want to investigate, including the individual’s name, home address, Social Security number, phone number and date of birth, and Teletrack provides them a credit report.

According to the class action lawsuit, however, Teletrack also compiles this personal information into a database and illegally sells the information to third parties, who use the personal information obtained from the lists to solicit new customers.

Teletrack paid $1.8 million last year to the Federal Trade Commission to settle claims that this conduct violated the Fair Credit Reporting Act.

“Since 2007, in multiple instances, Teletrack has furnished consumer reports to third parties for the purpose of marketing, which is not a permissible purpose under the FCRA,” the FTC alleged. In addition to the $1.8 million settlement, Teletrack signed a consent decree promising to furnish consumer reports only to “those persons which it has reason to believe have a permissible purpose, or as otherwise permitted by the Fair Credit Reporting Act.”

The lead Plaintiffs in the Teletrack class action lawsuit say they each obtained a payday or high-interest loan within the past few years and, as a result, their personal information was included in Teletrack’s marketing lists and disclosed to third parties. They say they received solicitations from other payday or high-interest lenders as well as calls demanding payments for loans they did not obtain, and assert these solicitations are a result of Teletrack’s unlawful disclosure of their personal information.

Teletrack tried to dismiss the class action lawsuit, but U.S. District Judge Sharon Coleman refused their motion, finding that the Plaintiffs established standing to bring a Fair Credit Reporting Act (FCRA) claim.

“The FCRA statute does not authorize suits by the public at large, but instead, creates an individual right not to have unlawful practices occur with respect to one’s own consumer reports,” Coleman said. “Therefore, there is a connection between the individual plaintiffs and the violation alleged such that, the plaintiffs have adequately alleged an individual injury in fact under the FCRA.”

If Teletrack is found liable for violating the FCRA, the company will have to pay consumers covered by the class action lawsuit an amount equal to the actual damages they sustained, or damages between $100 and $1,000, whichever is greater.

The case is Danita Henry, et al. v. Teletrack, Inc., Case No. 11-cv-4424, U.S. District Court, Northern District of Illinois, Eastern Division.