CFPB settles enforcement action against employment background screening companies for alleged FCRA Violations.

A legal gavel on an American flag

Recently several of the largest background screening companies have been hit hard with enforcement action from the CFPB (Consumer Financial Protection Board) siting the following reasons:

  • Creating a heightened risk that its consumer reports would include criminal records belonging to another individual with the same name as the applicant because the companies used only two personal identifiers to match criminal records to an applicant
  • Failing to ensure that public record information that was included in the consumer reports was complete and up to date
  • Not notifying consumers that public record information was being reported
  • Reporting adverse information about consumers outside of the allowable reporting period of seven years
  • Incorporating “high risk” indicators from a third-party source without verifying the accuracy of such designations.

If the Order is entered by the court, the background screening company most recently fined will be required to pay $6 million in monetary relief to affected consumers whose employment opportunities may have been adversely affected by it’s practices and a $2.5 million civil money penalty to the CFPB.  

The Order also includes injunctive relief to prevent the claimed illegal conduct from recurring.  Among other requirements set forth in the Order, the background screening company must remain registered on the CFPB’s Company Portal for at least five years and establish a Compliance Committee that will be responsible for overseeing compliance with the Order.

This is a stark reminder that the CFPB’s enforcement jurisdiction extends to all entities subject to the FCRA’s requirements, regardless of whether the entity is a bank or non-bank company providing consumer financial services.   

It is also a reminder that both the creation of employment background screening reports and the use of such reports by employers when making personnel decisions triggers FCRA compliance obligations.

There is a growing list of large background screening companies that have been hit with fines.  Some of the basic problems include:

  • Failing to take basic steps to assure accuracy
  • Including impermissible information in consumer reports

VeriScreen has been conducting background checks for over 25 years and has never had a complaint filed.  One of the keys to our success is our trademarked Person Search Plus that is the most comprehensive identification tool in the industry.  It goes back 30 years.  Even though we are only going to search the last 7 years of records, we want to know we know we have the right applicant and where the person has lived or visited. 

In addition, we do not outsource any of our work, answer our phones without menu trees and stick by our believe that “big is not better.”


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