Consumer Reporting Agencies Hit with $13 Million Class Action Lawsuit.

Two of the largest employment background screening companies in the U.S. have been hit with a $13 million class action lawsuit for failing to ensure that they provided accurate information to employers. The Consumer Financial Protection Bureau (CFPB) announced Thursday that General Information Services and its affiliate backgroundchecks.com potentially violated consumers’ eligibility for employment and caused harm to their reputation, according to the agency. “General Information Services and its affiliate failed to take basic steps to provide accurate background screening reports to employers about job applicants”, said Richard Cordray, Director of the CFPB. Both companies sell more than 10 million reports on job applicants to employers each year, consisting of criminal history and civil records.

General Information Systems issued a statement and held firm that they complied with the Fair Credit Reporting Act (FCRA), based on the companies’ analysis of the weakness alleged in the consent order and all governing law and regulatory guidance. GIS believe that they complied with the Fair Credit Reporting Act’s requirement to use reasonable procedures to ensure maximum possible accuracy in creating background reports. There were two major violations that they CFPB found:

1. Reporting public record information that didn’t belong to the subject of the report – General Information Services didn’t require the employer to provide a middle name of job applicants on the disclosure form; this resulted in records being reported with just a first and last name match. Additionally, it was found that between 2010 and 2014, nearly 70% of criminal records that were disputed by job applicants were found to be wrongly included in their background report and corrections needed to be made.
2. Providing information outside of the appropriate reporting time – The companies failed to ensure that civil judgments they reported occurred within the last 7 years, pursuant to the FCRA requirements.

The terms of the settlement are as follows:

• GIS agreed to pay $10.5 million in relief to consumers ($1,000.00 per consumer)
• Civil penalties of $2.5 million
• GIS will revise their compliance procedures
• GIS will retain an independent consultant to review their policies and procedures, and develop a comprehensive audit program.