FTC Collects $3.5 Million From TeleCheck For Failing To Investigate Disputes Or Correct Errors

telecheckOne of the nation’s largest check authorization service companies is going to be cutting a rather large check to settle charges made by the Federal Trade Commission.

TeleCheck, Inc., along with its associated debt-collection entity, TRS Recovery Services, Inc., agreed to pay $3.5 million to settle charges of violating the Fair Credit Reporting Act, the FTC announced Thursday.

The Houston-based company compiles consumers’ personal information and uses it to help retailers determine whether or not to accept a consumers’ check. TeleCheck is the reason that sometimes your check is accepted at Best Buy (and many other retailers) and why it’s randomly rejected at the same store the next day.

The FCRA gives consumers whose checks are denied based on information provided by TeleCheck the right to dispute that information and have TeleCheck investigate and correct any inaccuracies. However, the FTC complaint alleges that TeleCheck violated several aspects of the FCRA, including:

  • not following proper dispute procedures – refusing to investigate disputes;
  • failure to follow reasonable procedures to assure the maximum possible accuracy of information provided to merchant clients;
  • failure to promptly correct errors on consumers’ reports.

TRS, which handles consumer debt taken on by TeleCheck and provides information about consumers, allegedly violated the FTC’s Furnisher Rule, which requires entities to ensure accuracy and integrity of the information provided to consumer reporting agencies.

In addition to paying $3.5 million, TeleCheck and TRS must alter business practices to comply with the requirements of the FCRA and the Furnisher Rule in the future.

The case is part of an initiative by the FTC to target the practices of data brokers. Last August, the FTC charged similar violations and penalty amounts against Certegy Check Services, Inc., another check authorization company.

The FTC provides helpful information to businesses on the Furnisher Rule and what they should know about consumer reports.

TeleCheck to Pay $3.5 Million for Fair Credit Reporting Act Violations [Federal Trade Commission]

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  1. evlpete says:

    Fail: they should have been prevented from doing business UNTIL business practices were altered to comply with the requirements of the FCRA and the Furnisher Rule

    • SingleMaltGeek says:

      Seriously. Put them out of business for a few days and it would have probably cost them more than that. THEN you’d see some changes.

      • PhillyDom says:

        They’d have been in court the same day asking for an injunction, probably get it, and drag out the case for years.