PCCA Journal|2
nd
Quarter 2013
37
HR Update
A
s the unemployment
rate continually fluctu-
ates, companies have
become more depen-
dent on pre-employ-
ment background screening to assist in
the selection process. With this being
the quickest and easiest way to obtain
invaluable information on a candidate, it
is imperative that a consumer reporting
agency (CRA) provides an employer with
accurate and up-to-date information.
For the past 40-plus years, the Fair
Credit Reporting Act (FCRA) has policed
the information that is and is not report-
able in a consumer report. The unfor-
tunate fact is that many CRAs are not
following the FCRA to the best of their
ability and in turn are providing inaccu-
rate and/or unreportable information to
an employer.
Feds Tighten Oversight
In the past few years, the Federal Trade
Commission (FTC) and Consumer Fi-
nancial Protection Bureau (CFPB) have
tightened the leash on the human capital
management industry, uncovering many
mistakes that are being made by some of
the biggest players. Within the past year
alone, we have seen General Information
Services (GIS), LexisNexis, HireRight,
and Sterling Infosystems being brought
forward on allegations of misreporting
information and/or violations of the
FCRA.
The first offender, GIS, is being
scrutinized for many issues, including
providing inaccurate and not up-to-date
information to the U.S. Postal Service,
as well as consumer organizations
including Wal-Mart and Aaron’s Rents.
Particularly, one case brought forth to
the United States District Court for the
Eastern District of Pennsylvania proved
that by including information found
through a simple database search with-
out verifying the accuracy of adverse
information before release, GIS caused
candidates to be removed from the can-
didate pool with false reporting of said
candidate’s criminal history. GIS, well
known for its government contracts, has
three class-action lawsuits regarding its
FCRA violations.
Fighting back by claiming the FCRA
is unconstitutional, GIS has resorted to
suing its own client, the federal govern-
ment. In response, the FTC, Depart-
ment of Justice (DOJ), and CFPB filed
a memorandum brief that supports the
constitutionality of the FCRA, which in
turn deemed the FCRA constitutional.
Adding insult to injury, GIS is not only
hit with litigation that could cost up-
wards of $1 billion, but also class-action
notices alone are expected to exceed
$250 million. This motion signifies that
GIS may be the latest CRA to be hit with
an extraordinary fine due to noncompli-
ance.
HireRight, a repeat offender, will
be forced to pay $2.6 million to those
candidates who have been affected by
misstatements on consumer reports.
Through the refusal to use reasonable
practices to insure the maximum ac-
curacy of information, failing to provide
customers a copy of their reports, and
the lax reinvestigation of consumer
disputes, HireRight violated the FCRA as
required by federal law. The result is the
second-largest civil penalty that the FTC
has seen to date. The DOJ filed a com-
plaint on behalf of the FTC, proposing an
order against HireRight that requires it to
discontinue illegal practices.
In addition, CRAs and employers who
provide and/or use consumer reports for
hiring decisions must allow candidates
to access their information and dispute
any inaccuracies they find on their con-
sumer report, even if the report contains
no adverse information. Furthermore,
CRAs are required to notify consumers
of the information found during the re-
investigation within five days of comple-
tion. HireRight, in many cases, failed to
comply with this requirement not only
by failing to conduct reinvestigations,
but also by not providing candidates
who wanted to dispute information
with a copy of their consumer report.
To make a difficult situation worse,
HireRight recently settled an FCRA class-
action lawsuit for $28 million and is still
battling other federal lawsuits over its
noncompliant consumer reporting prac-
tices.
Further offenders include LexisNexis
and Sterling, two CRAs that have previ-
ously settled with those who alleged
that their rights were violated under the
FCRA. LexisNexis, which has formerly
paid millions to settle similar federal
litigation, recently agreed to pay $13.5
Consumer Reporting Agencies
Violate the Fair Credit Reporting Act
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