Smart Home Monitoring Company Pays $20 Million to Settle Allegations of Consumer Credit Reports Misuse

  • The Federal Trade Commission (“FTC”) reached a settlement with smart home security and monitoring company Vivint Smart Homes Inc. (“Vivint”) to resolve allegations that it improperly obtained and misused consumer credit reports in violation of the FTC Act, the Fair Credit Reporting Act, and the Red Flag rule.
  • The complaint alleged, among other things, that Vivint sales representatives used the credit history of unrelated consumers in order to qualify potential customers for financing when the potential customers’ own credit history was not sufficient for such qualification. If the financing account subsequently went into default, Vivint allegedly would refer the innocent parties whose credit history was stolen to its debt buyer and subject them to debt collectors. The complaint further alleged that Vivint failed to implement an identity theft prevention program required by the Red Flag rule despite being a frequent user of credit reports, including making more than 130,000 credit report inquiries in a single month.
  • Under the terms of the stipulated order, Vivint will pay $20 million, of which $5 million will be used to compensate affected consumers and $15 million is a civil penalty. Vivint will also implement an employee training and monitoring program and an identity theft prevention program, among other things.