The Federal Trade Commission settled charges with the online data broker U.S. Search, Inc. over its “PrivacyLock” service, in which the company charged a $10 fee to “lock their records” of consumers so that they could not be viewed or purchased by others on the site.

The company advertises itself as the top people search Web site in the United States. It compiles public records and then sells consumer data to the public – including names, addresses, tax liens, phone numbers, aliases, marriage and divorce records, home values, civil judgments and lawsuits, bankruptcies, and criminal records.

Customers can find information about others by using a number of search services on the site, like “people search,” “background check,” and a “reverse lookup” that will return the information associated with a particular phone number or property address. At the same time, U.S. Search also offered the “PrivacyLock” service for a $10 fee, which the company advertised would prevent such information from appearing on its Web site or search results for a period of one year. Accordingly, persons could pay to obtain information about others who had paid to block the disclosure of information at the site.

The FTC alleged that since June 2009, the company made deceptive claims about the service. Specifically, the company did not block consumers’ names from showing up as an associate of someone else, nor did it block the consumers’ information from appearing in the “reverse search” of phone numbers or addresses. The service also did not work if a consumer had multiple records or changed addresses.

Under the terms of the settlement, U.S. Search agreed to refund fees to approximately 5,000 consumers and is barred from making misrepresentations about the effectiveness of its services.

To read the complaint in In the Matter of US Search Inc., click here.

To read the consent agreement, click here.

Why it matters: The agency said that the settlement was “the latest in a series” of FTC cases challenging companies’ failure to honor their privacy pledges, including the agency’s recent involvement in a bankruptcy proceeding by the owner of a magazine aimed at gay teens. Other online data brokers, like Spokeo, have faced both regulatory scrutiny as well as a class action lawsuit alleging the company violates the Fair Credit Reporting Act by offering inaccurate data about consumers without effectively allowing them to remove incorrect reports.