Background Check Companies Fined $13M
Two of the country's biggest background screening companies routinely reported misattributed or expunged criminal records to employers - 70% of the time!
General Information Services and e-Background-checks, two of the largest background screening companies in the country, have been ordered by the Consumer Financial Protection Bureau (CFPB) to pay out a hefty $10.5 million to 11,500 individuals as a mea culpa after violating the Fair Credit Reporting Act (FCRA) and $2.5 million in civil penalties. It seems as if these mega companies, with all their lawyers and highly paid executives, never even took Employment Background Check 101.
The FCRA is set in place to protect consumers in situations just like this. Inaccuracies and irrelevant information provided within a background screening are common – you would think these corporations would have known! What’s worse, an incorrect report can truly be detrimental to someone’s reputation, cost them a job, and accordingly, result in a loss of income. The US Federal Trade Commission established the FCRA in 1970 as a way to, “promote the accuracy, fairness and privacy of information in the files of consumer reporting agencies. There are many types of consumer reporting agencies, including credit bureaus and specialty agencies, such as agencies that sell information about check writing histories, medical records and rental history records.”
The CFPB conducted a thorough investigation into the detailed background check procedures used by the two companies and found that they neglected to follow through with matching the records obtained during a search to the appropriate individual. The investigation also found that additional audits were also neglected to ensure that the reports generated were accurate and contained only information that was legally relevant within seven years. These lapses were far from rare: 70% of the criminal histories included in the background checks were disputed and required General Information Services to make many modifications after receiving complaints from consumers.
Upon finding General Information Services and e-Background-checks to be in clear violation of the FCRA, a statement was released, outlining their findings. It read, “…the companies provided prospective employers with inaccurate reports that included criminal records attached to the wrong consumers, dismissed and expunged records, and misdemeanors reported as felony convictions. These inaccuracies can result in the denial of employment, missed economic opportunity and reputational harm to otherwise qualified applicants.”
Each of the 11,500 individuals impacted by the errors are expected to receive approximately $1,000 each, which doesn’t exactly replace the jobs lost, nor the hit to their reputations.
Policy and Procedure Reviews
Violations of this nature are taken very seriously and require the companies at fault to do more than just sign a check as a means to appease those affected by the oversights. Both companies are required to hire a consultant who is not affiliated with either party. The consult is being tasked with conducting a thorough review of the current policies in place, review staffing across all company levels, implement a new audit program and incorporate a more consistent system of differentiating between the various screenings generated ensure accuracy within each report conducted. This is no small task; the two companies are reported to conduct ten million background checks each year.
General Information Services and e-Background-checks disagreed with the CFPB’s findings that they violated FCRA requirements and stood by their procudures. However, they did “acknowledge that every background screening agency must engage in continuous improvement” and ultimately agreed to the terms set forth by the bureau.
Sure they did.