The Federal Trade Commission is cracking down on data brokers to make sure that consumers are treated fairly and that the information passed on about them is accurate.

That was the message when Florida-based Certegy Check Services, one of the nation’s largest check-authorization-service companies, agreed to pay $3.5 million to settle FTC charges that it violated the Fair Credit Reporting Act (FCRA).

Certegy is considered a consumer-reporting agency and, as such, it helps businesses determine whether they will accept a customer’s check based in part on information in its files about the person’s check-writing history. Certegy also furnishes information to other credit-reporting agencies.

Federal law says that if the information the company provides results in a check’s being denied, the consumer has the right to dispute the information. The data supplier has to take a number of steps to determine what’s right, including investigating the dispute within a reasonable time and correcting inaccurate information.

Imagine standing in line at the grocery store, handing over your check and having it denied. Not a great feeling if you know you haven’t done anything wrong.

The FTC has been scrutinizing data brokers’ practices to see whether the companies are following proper dispute-resolution measures. The agency said Certegy failed to assure that the information it provided to retailers was accurate and that it didn’t follow proper dispute procedures. It also said that the company failed to create a streamlined process so consumers could receive the free annual reports to which they are entitled under the FCRA and that it didn’t have reasonable written policies and procedures ensuring the accuracy of information it provided to other credit-reporting agencies.

The actions against Certegy are the first alleging violations of the so-called Furnisher Rule, which took effect in 2010. That rule was established to ensure the accuracy and integrity of information provided to credit bureaus and to allow consumers to directly take challenges to the furnishers of the information.

FIS, the company that owns Certegy, said in a statement: “Consumer satisfaction is at the very core of Certegy’s business. We are committed to continuing to bolster our internal processes and have addressed all items identified by the FTC in order to ensure full compliance and to achieve consistent outstanding customer service.”

The FTC also said in its complaint that Certegy shifted the burden to customers to conduct an investigation of their claim “rather than fulfilling its legal obligation to reinvestigate disputed information.” It’s worth noting what caught the ire of the FTC. Specifically, the agency said that if a consumer argued that he didn’t have a returned check from a particular merchant, Certegy required the person to contact the merchant himself to resolve the dispute.

Or if a check was declined as a result of an invalid ID, the company required the consumer to obtain and send driving records to prevent a future check from being declined. Here’s a practice that would make me mad. A consumer can prove by a bank statement that the bank had honored a check. But rather than accepting the statement as proof of the bank’s payment, Certegy would require that the consumer obtain a letter from the bank, on bank letterhead and signed by a bank employee, before resolving the dispute in the consumer’s favor, according to the FTC.

This is a key settlement because it will help “many older consumers and people without alternate means of payment, such as credit cards,” said Jessica L. Rich, director of the FTC’s Bureau of Consumer Protection.

And yes, lots of people still write checks. Although check payments have been declining, eclipsed by debit cards, billions of checks are still processed, according to the 2010 Federal Reserve Payments Study, the latest figures available.

Checks written by consumers to businesses for household bill payments and point-of-sale transactions represented 44 percent of all checks written. The number of checks paid in 2009 is estimated to have been 24.5 billion, with a value of $31.6 trillion. From 2006 to 2009, the percentage of checks cleared electronically has more than doubled because of the efficiency of the check-processing system.

That brings me back to the FTC action. Certegy has to correct the practices that led to the settlement, which is subject to court approval. For example, Certegy can’t require consumers to contact a third party if the company can get the information itself. Consumer complaint investigations have to be done within 30 days, or 45 days if consumers are providing additional information.

For a major company, a $3.5 million fine might not do much to the bottom line. But the precedent of this action should have an impact on all data suppliers. What the FTC is saying is that when companies provide businesses with credit information on consumers, they had better do their best to make sure the information is accurate — or correct it if it isn’t.

Readers may write to Michelle Singletary at The Washington Post, 1150 15th St. NW, Washington, D.C. 20071 or Personal responses may not be possible, and comments or questions may be used in a future column, with the writer’s name, unless otherwise requested. To read previous Color of Money columns, go to