FTC Fines Check Cashing Company $3.5 Million

The Federal Trade Commission (“FTC”) is tightening
the Justice _scalereins 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 check
authorization service company and one of the largest in the
country.  After filing a formal complaint, the FTC argued
Certegy’s conduct violated of the Fair Credit Reporting Act
(“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
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

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

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
for a free case review.