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FTC Fines Check Cashing Company $3.5 Million

On Behalf of | Jan 23, 2013 | Consumer Protection

The Federal Trade Commission (“FTC”) is tightening the reins on data brokers to ensure fair treatment of consumers in the market place by making sure information reporting is more accurate than in years past.

In its effort to promote this fair treatment, after numerous consumer complaints, the FTC launched an investigation against Certegy Check Services, a Florida based chec authorization service company and one of the largest in th country.  After filing a formal complaint, the FTC ar ue Certegy’s conduct violated of the Fair Credit Reporting Ac (“FCRA”), and has since agreed to settle the claims and pay $3.5 million in fines.

Under the FCRA, Certegy is considered to be a consumer reporting agency and a furnisher of information. Essentially, Certegy provides businesses with information from its database to aid in determining whether or not to accept a consumer’s check, based on his or her check writing history. Certegy also furnishes its information to other credit reporting agencies.  The FCRA states that if the information provided by a reporting company results in a check being denied, the consumer has the right to dispute the information used for the denial.  The information supplier is required to investigate the dispute within a reasonable time and correct any and all inaccurate information.  In other words, if your check is denied at a store you have a right to dispute with the check cashing service, just like your right to dispute inaccurate information on your credit report after being denied credit because of the information reported.

According the FTC, Certegy failed to assure that the information it provided to merchants was accurate and didn’t follow protocol in
responding to disputes when consumers were denied the opportunity to pay by check.  The FTC also stated that Certegy failed to create a process allowing consumers who receive a denial to receive the free report that they are entitled to under the FCRA.  Furthermore, Certegy had no written procedures ensuring the accuracy of information it distributed to other credit reporting agencies.

In its settlement, the FTC ordered that Certegy correct all its practices that were in violation of the FCRA and pay a fine of $3.5 million.  Certegy must set up a process where it can better guarantee accuracy of the information it reports, not shift the duty of the investigation onto the consumer, like it had been doing in the past; It must put procedures in place to allow consumers to dispute and to better respond to their dispute requests; It must provide consumers with their right to request a consumer report free of charge after being denied the right to pay by check.

While most would argue that $3.5 million is not a hefty enough fine to deter a large company like Certegy, it may certainly be enough to deter conduct in violation of the FCRA from other companies moving forward and sends a clear message that this type of conduct will not be allowed.

If you are having problems writing checks or with information on your credit report contact SmithMarco P.C. for a free case review.