On August 15, 2013 the Federal Trade Commission announced a settlement with Cetergy Check Services, Inc. (“Cetergy”) stemming from allegations that Cetergy violated various provisions of the Fair Credit Reporting Act (“FCRA”). The settlement agreement includes a $3.5 million civil penalty for “knowing violations … that constituted a pattern or practice of violations.”

In its complaint, the FTC alleged that Cetergy, a company that provides check verification services for merchants, did not follow reasonable procedures to ensure the maximum possible accuracy of report information it maintained about consumers. According to the complaint, Cetergy did not sufficiently track the resolution of consumer disputes and thus did not timely delete inaccurate or incorrect information it held about consumers. Among other violations, the complaint alleged that Cetergy (1) impermissibly shifted the burden to consumers to investigate disputed information, (2) failed to complete the investigations it did undertake within the time periods specified in the FCRA, (3) failed to notify consumers when it terminated investigations, and (4) failed to promptly notify consumers of the results of its investigations regarding disputed information.

The settlement, filed in the United States District Court for the District of Columbia, includes requirements that Cetergy:

  • deliver a copy, and obtain a signed acknowledgement, of the settlement to current and future Cetergy principals, directors, personnel, agents and representative for three years;
  • submit a compliance report to the FTC within 180 days;
  • notify the FTC of any changes in structure that may affect its compliance with the settlement for 10 years;
  • create certain records (e.g., and accounting and personnel records as well as consumer complaints and training materials related to FCRA) for 10 years, and retain each record created for five years; and
  • submit compliance reports to the FTC upon request.

In the press release accompanying the settlement, Jessica L. Rich, Director of the FTC’s Bureau of Consumer Protection stated, “[t]oday’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.”

Read the FTC Business Center Blog’s post about the Cetergy settlement.