Certegy Check Services Inc., one of the largest check authorization service companies, agreed to pay $3.5 million to settle charges that it violated the Fair Credit Reporting Act (FCRA).  

The Federal Trade Commission's complaint against the company alleges that it did not follow proper dispute rules and failed to follow reasonable procedures to assure "maximum possible accuracy" of the information it provided to its merchant clients, as required by the FCRA.

Certegy is a St. Petersburg, Fla.-based consumer reporting agency that compiles consumers’ personal information and uses it to help retail merchants throughout the U.S. determine whether to accept consumers’ checks. Under the FCRA, consumers whose checks are denied based on information Certegy provides the merchant, have the right to dispute that information and have Certegy correct any inaccuracies. The settlement requires Certegy to make improvements in these areas.

The case is part of a broader initiative by the FTC to target the practices of data brokers, which often compile, maintain and sell sensitive consumer information. Consumer reporting agencies such as Certegy are data brokers that sell information to companies making important decisions about consumers - such as their ability to get credit or pay for goods and services by check.

"Inaccurate information in a consumer reporting agency’s file can have a huge impact on a person’s everyday life, starting with their check being denied at the grocery store," said Jessica L. Rich, director of FTC’s Bureau of Consumer Protection. "In this case, we alleged that Certegy delivered a one-two punch: the company not only failed to assure that the information it provided to retailers was accurate, but it also failed to follow proper dispute procedures. Today’s settlement will benefit consumers who use checks to pay for essential goods and services, including many older consumers and people without alternate means of payment, such as credit cards."

The complaint further alleges that Certegy violated the FCRA by failing to create a streamlined process for consumers to obtain free annual reports that they are entitled to; and establish and implement reasonable written policies and procedures regarding the accuracy and integrity of information it furnishes to other consumer reporting agencies.

This is the first time the FTC has alleged violations of the Furnisher Rule, which went into effect on July 1, 2010. The settlement requires Certegy to comply with the Furnisher Rule, as well as the requirement to maintain a streamlined process so that consumers can request their free annual reports.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.