Consumer Financial Protection Board (CFPB) sues the two largest background screening companies.

On October 29th, the CFPB took action against two of the country’s largest employment background screening report providers for violations of the FCRA.  This is one of the CFPB’s most significant FCRA actions to date, following a relatively small number of FCRA consent orders by the CFPB over the past few years.  The providers are consumer reporting agencies that annual generate and sell over 10 million consumer reports about job applicants to potential employers.  The consent order focuses on several major alleged violations and provides for various injunctive and monetary relieve, as well as civil monetary penalty.

Maximum Possible Accuracy Claims:  The CFPB alleges that the providers failed to take basic steps to assure the maximum possible accuracy of their consumer reports.  In particular, it asserts that the providers lacked written procedures for addressing situations in which confusion about a consumer’s identity could arise, such as researching public records information for consumers with common names or requiring employers to use middle names to match criminal records to consumers.  As a result, the CFPB contends, the providers reported inaccurate criminal information about job applicants.  The CFPB criticized the extent to which the providers tested their data to ensure that they reported information with maximum possible accuracy.

Adverse Action Claims:  According to the CFPB, the providers also failed to meet FCRA’s requirement governing the furnishing of consumer reports containing information likely to adversely affect a consumer’s ability to obtain employment.  The CFPB pointed to the insufficiency of the providers’ policies and procedures to ensure that their background reports excluded non-reportable information.

The Consent Order: The providers are to pay $10.5 million in monetary relief to consumers, as well as a $2.5 million civil penalty.

This most recent consent order is a reminder that the CFPB is paying close attention to FCRA compliance, focusing not just on the accuracy of consumer reports, but also on the companies’ efforts to address asserted inaccuracies in consumer information.

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