The Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) recently took action against a rental screening company. This company is a subsidiary of a major consumer reporting agency (CRA) and allegedly violated the Fair Credit Reporting Act (FCRA). According to the suit, the company failed to ensure the accuracy of rental background checks provided to landlords.

Furthermore, the rental screening company kept the identity of the third parties from renters. These third parties allegedly provided inaccurate information, harming the renters’ opportunities and image. The FTC and CFPB have requested a federal court to have the CRA pay $15 million to cover the FCRA violations. They also asked for improvements to how the CRA reports evictions.

Complaint Details

The joint complaint explained that the rental screening company repeatedly failed to ensure they delivered up-to-date reports. Failing this, the CRA revealed it did not use recent public records, missing dismissed evictions. As such, it reported several entries for the same eviction case and included sealed records.

Furthermore, the rental screening company refused to disclose who provided the inaccurate information. Instead, it claimed the criminal or eviction records came from the jurisdictions where the proceedings occurred. If true, the affected individuals had to contact third-party vendors to correct this inaccurate information. However, the company failed to share this information with the renters.

The CRA must pay $8 million for falsely informing consumers that it promptly placed or removed security freezes or locks. Though the CRA claimed it completed the requests to place or remove freezes or locks, it added the requests to a backlog. The law requires CRAs to promptly fulfill an individual’s request to place or remove security freezes or locks. It also mandates the CRAs to provide this service for free.

Another mark against the rental screening company concerns pre-screened offers. CRAs must keep active-duty military personnel off these lists. This requirement reduces the risk of identity theft for such personnel, especially when they travel overseas for long periods.

What Could Happen

If the court enters the order the CFPB and FTC have proposed, the CRA and its subsidiary would pay consumers $11 million. They would also stop the illegal tenant screening practices, such as not reporting more than one filing for a single eviction case. They must also refrain from reporting eviction cases without a final outcome. The company would also pay a $4 million penalty to the CFPB’s victims’ relief fund.

As for the $8 million, $3 million of it would go to consumers, and the remaining $5 million would go to CFPB’s victims’ relief fund. The CFPB also requested that the CRA find and correct its technology problems to prevent further consumer harm. They must fix these issues to ensure compliance when placing or removing security freeze and lock requests.

This case shows the importance of complying with the FCRA. Failure to do so can result in lawsuits, fines, and penalties. The best way for businesses to ensure compliance with the FCRA in their screening processes is to partner with an experienced background-checking company.

Keep your business compliant with new laws and regulations with JDP’s reliable background checks. Contact a sales rep today.

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The Federal Trade Commission (FTC) recently announced that it will require two background reporting companies and three related organizations to pay a $5.8 million penalty. This decision settles allegations that they violated the Fair Credit Reporting Act (FCRA). In addition, this penalty addresses claims that the companies marketed their consumer background reports as a tool to screen applicants.

According to Samuel Levine, Director of the Bureau of Consumer Protection, “Companies that compile personal information and sell background reports are on notice: Don’t make false claims about the contents of your reports. And, if you market your reports to be used to screen tenants or employees, you are a consumer reporting agency, and you must follow the requirements of the FCRA.”

The Complaint

The FTC complaint explained that the companies made themselves subject to the FCRA. They accomplished this by purchasing advertising keywords from major search engines to make their services appear for employment or tenant screening services. These purchases included keywords such as “pre-employment screening” and “tenant background check.” The FTC argued how providing these background reports with the expectation to use them for employment or housing qualifies them as consumer reporting agencies under the FCRA.

According to the FTC, these companies committed multiple violations under the FCRA. For example, the companies failed to comply with the FCRA’s Section 607(a): Furnish consumer reports for “permissible purposes” only. The companies also failed to investigate or respond to consumer disputes despite providing buttons marked “Remove” and “Flag as Inaccurate.”

What Happened

Furthermore, the companies advertised their extreme accuracy despite taking no steps to verify the accuracy of third-party information. The FTC also claimed the companies provided push notifications or statements indicating that individuals had criminal or arrest records. However, consumers had to pay a monthly subscription fee to see the full report. In many cases, the reports only contained non-criminal traffic violations.

The proposed settlement is still waiting for approval by a judge. Until approved, the companies must implement a monitoring program to ensure they do not violate the FCRA further. Furthermore, this program will assess whether they operate as a whole or partial consumer reporting agency.

This case serves as a reminder that all employers must comply with the FCRA when acquiring consumer reports. One way to ensure compliance is by working with a trustworthy background screening company. The right provider will provide accurate reports that meet federal, state, and local screening regulations.

JDP offers experienced background screenings to help you stay compliant in your hiring practices. Contact a sales rep today.

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One of the U.S.’s largest solid waste and recycling companies has reached a preliminary settlement. This agreement resolved claims that its background check violated the federal Fair Credit Reporting Act (FCRA). Under this settlement, the company agreed to pay $150,000 to settle these allegations.

The Case

According to the settlement agreement, this suit occurred after the employer procured a background check on the plaintiff. The report allegedly included extraneous information beyond the FCRA’s requirements. Following this, the plaintiff claimed that the company denied him employment based on the contents of this report. 

However, he did not receive a pre-adverse action notice, which the FCRA requires the employer to provide. The FCRA states that employers must procure this notice before taking adverse actions, such as rescinding a job offer. Under the FCRA’s 1681b(b)(2)(A)(i), employers may request a consumer report after providing the applicant with a disclosure and authorization form.

FCRA’s Requirement

This form must stand alone, “clear and conspicuous,” and “in a document that consists solely of the disclosure.” What can or cannot be in such a form has been the matter of considerable litigation. However, courts generally agree that this should consist solely of a clearly worded notification that the employer intends to acquire a background screening report.

Furthermore, the FCRA outlines a process for cases when employers decide against hiring applicants based on background reports. Section 15 U.S.C. § 1681b(b)(3) requires the company to provide the individual with a pre-adverse action notice and time to respond. This pre-adverse action notice should notify the individual of the report’s results. It should also include a copy of the background check and a description of their rights under the FCRA. 

Progress So Far

This case moved to the U.S. District Court for the Middle District of Florida before both parties agreed to participate in mediation. As a result, it had to return to state court after the parties reached an agreement at mediation. The proposed settlement will undergo a Fairness Hearing on October 18, 2023.

This hearing will determine whether the court approves the settlement. If approved, the settlement will benefit individuals who applied or worked in a position with the company. However, the case will only affect those subjected to a consumer report obtained on or after June 5, 2020.

This proposed settlement illustrates the risks of failing to comply with FCRA and other background screening laws. As such, employers should consider working with a trusted screening provider. The right partner will use their experience and professional knowledge to ensure employers comply with relevant laws.

You can avoid this altogether by staying updated with compliance regulations. Contact a sales rep today to learn more.

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A major chain of booksellers has agreed to a settlement to resolve a class action lawsuit. This suit addressed claims that it violated the Fair Credit Reporting Act (FCRA). According to the case, the bookseller willfully violated the FCRA by including extraneous language in its disclosures unrelated to consumer reporting.

The issues began when the named plaintiff applied to work for the bookseller. As part of the process, the bookseller sent the plaintiff an email linking to a website containing a consumer report disclosure. This link would authorize the employer to procure a background check. It included information found in a typical notice for performing a background check. 

However, at the end of the disclosure, it included the following text:

“Please note: Nothing contained herein should be construed as legal advice or guidance. Employers should consult their own counsel about their compliance responsibilities under the FCRA and applicable state law. [A consumer reporting agency] expressly disclaims any warranties or responsibility or damages associated with or arising out of the information provided herein.”

The plaintiff viewed this disclosure and authorized the bookseller to acquire a background check. Later, the plaintiff filed a class action against the bookseller. The plaintiff claimed that it had willfully violated the FCRA by including these extraneous details unrelated to the performance of a background check. This inclusion violated the FCRA’s requirement that a disclosure be a standalone document free of irrelevant information.

The employer moved for summary judgment, arguing that a reasonable jury could not find its violation was willful. The bookseller asserted that it did not intend to include extraneous language. This inclusion resulted from a drafting error when it attempted to adjust a sample disclosure. According to the bookseller, it received this sample from the consumer reporting agency contracted to conduct its background checks.

The trial court agreed with the employer and granted the motion for summary judgment in its favor. However, the plaintiff appealed this motion. As such, a California Court of Appeal reversed this ruling. It found that the failure to catch this mistake could prove willful by a jury. It then remanded the case to the trial court for further proceedings.

Both parties in these proceedings have reached a settlement agreement to resolve the lawsuit. Under this settlement, the bookseller agreed to a lump sum payment of $600,000 to cover necessary expenses and to distribute among class members.

As this case illustrates, employers should focus on FCRA compliance in any background check program. The best way to help ensure compliance is to partner with a trusted background check provider. The right partner will utilize their experience to ensure compliance with FCRA, state, local, and federal regulations.

JDP makes background checks easy and reliable. Speak with a compliance expert today.

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