Background Screening

CFPB Takes Action Against General Information Services and e-Background-checks.com for various violations of the FCRA

The CFPB has ordered two of the largest employment background screening providers (General Information Services and its affiliate, e-Background-checks.com, Inc.) to pay $10.5 million in relief to consumers and pay $2.5 million in civil penalties for violations of the Fair Credit Reporting Act (FCRA) resulting from the reporting of “serious inaccuracies.”

Background Checks | Employment Screening

Background Checks and the Federal Law

Employers obtain background checks (or consumer reports, commonly known as credit reports) to aid decision making when it comes to evaluating a consumer for employment, promotion, reassignment, or retention as an employee. Intelli Corp, HireSafe, HireRIght, Clarifacts, EmployeeScreenIQ, and Proforma are just a few of the many background check/employee screening companies that offer employers their services. When an employer conducts a background check, they may be provided with any of the following information about you:

  • Credit reports;
  • Criminal and civil records;
  • Social security number (trace and validation);
  • Employment verification;
  • Education verification;
  • Professional license verification;
  • Motor vehicle and driving records;
  • Military record verification; and
  • Workers’ compensation history.

Employer Agrees to $3M Employment Background Screening Class Action Settlement

K-Mart, in Pitt v. K-Mart Corp., Case No. 11-cv-00697, has reached a $3 million settlement in a class action lawsuit pending before the U.S. District Court for the Eastern District of Virginia. The class consisted of more than 64,000 job applicants who sued K-Mart for violations of the Fair Credit Reporting Act (the “FCRA”).  Specifically, Plaintiffs alleged they lost out on jobs without having a chance to challenge negative information reported to their prospective employers in background checks and that K-Mart failed to notify the job applicants they were rejected for employment because of the background checks.

Credit Reports and Employment Background Screening

One of the Federal Trade Commission’s (“FTC”) roles is to protect job applicants and employees against inaccurate information being reported to employers; because employers can access your credit report to make decisions regarding hiring, firing, promotion, reassignment, or retention. In addition to financial history, the consumer reports provided to employers consist of arrests, convictions, judgments, and bankruptcies. Recently, settlements have been reached in legal actions that have been brought against companies like Spoekeo, Inc. and HireRight Solutions, Inc. for failure to take reasonable measures to ensure the accuracy of consumer reports. Such failures resulted in inaccurate criminal history, belonging to someone other than the actual consumer being reported as if it was relating to the individual the report was requested for. Other failures included noncompliance with the FCRA rules and not ensuring the reports were used for only purposes provided by the law.