Smart Home Company Pays $20 Million for Fair Credit Reporting Act (FCRA) Violations

A smart home company has settled for $20 million with the Department of Justice as well as the  Federal Trade Commission (FTC) over alleged violations of the Fair Credit Reporting Act (FCRA), and FTC act particularly including violations of its Red Flags Rule which covers establishing a written identity theft prevention program.

The suit claims that they sell smart home security systems primarily through a door-to-door sale force. They failed to maintain an identity theft prevention program allowing their sales force, who are required to acquire a minimum credit score in order to proceed with a sale, to obtain credit reports without consent.

By doing this, these salespeople could acquire credit reports of individuals with names similar to those failing a credit check and use their information to complete sales. When individuals defaulted on this debt, it would result in debt collectors contacting the wrong individuals for collections.

The settlement will include $15 million in civil penalties as well as $5 million in monetary relief for the victims. They will also be required to take steps to ensure further FCRA and other violations will not reoccur.