Fort Myers, Florida – March 19, 2013
As the unemployment rate continually fluctuates, companies have become more dependent upon pre-employment 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 forty plus years the Fair Credit Reporting Act (FCRA) has policed the information which is and is not reportable in a consumer report. The unfortunate fact is that many CRAs are not following the FCRA to the best of their ability and in turn are providing inaccurate and/or un-reportable information to an employer.
In the past few years, the Federal Trade Commission (FTC) and Consumer Financial 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 without verifying the accuracy of adverse information before release, GiS caused candidates to be removed from the candidate pool with false reporting of said candidate’s criminal history. In addition to the aforementioned GiS, well known for their government contracts, has three class-action lawsuits regarding their FCRA violations.
Fighting back by claiming the FCRA is unconstitutional, GiS has resulted to suing its own client, the federal government. In response to this, the FTC, Department of Justice (DOJ), and Consumer Financial Protection Bureau (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 upwards of $1 billion, but also class-action notices alone are expected to exceed $250 million. This motion signifies that GiS may be the latest consumer report agency to be hit with an extraordinary fine due to non-compliance.
A repeat offender, HireRight, will be forced to pay $2.6 million to those candidates who have been affected by misstatement(s) on consumer reports. Through the refusal to use reasonable practices to insure the maximum accuracy 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 complaint on behalf of the FTC, proposing an order against HireRIght which requires them to discontinue illegal practices.
In addition, CRAs and employers who provide and/or use consumer reports for hiring decisions must allow a candidate to access their information and dispute any inaccuracies they find on their consumer report, even if the report contains no adverse information. Furthermore, CRAs are required to notify consumers of the information found during the reinvestigation within five days of completion. 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 are still battling other federal lawsuits over its non-compliant consumer reporting practices.
Further offenders include LexisNexis and Sterling; two CRAs who have previously settled with those who alleged their rights were violated under the FCRA. LexisNexis, who has formerly paid millions to settle similar federal litigation, recently agreed to pay $13.5 million to settle a national class action lawsuit on behalf of 31,000 people whose consumer rights were violated when their consumer report was sold to debt collectors. In addition, Sterling has numerous lawsuits pending for the violation of the FCRA, alongside many previously settled lawsuits regarding misinformation on consumer reports which denied candidates a position.
As required by federal law, all CRAs are expected to take the reasonable and required steps to ensure all consumer information on reports is valid, accurate, and up-to-date. GiS, HireRight, LexisNexis, and Sterling all failed to follow these procedures by providing inaccurate information on candidates to potential employers, including records belonging to the wrong person, records that were not up-to-date or accurate, and records that were not reportable under the FCRA.
While many employers believe they are getting an all-encompassing background screen for less than $15, current litigation has come to show that these background screens include information from databases, not from the state and/or county level. In many instances, these databases are not up-to-date or accurate and the information need to be confirmed at the state and/or county level to ensure true, up-to-date information on a candidate. Unfortunately, many CRAs are deferring from this practice and providing the information found in a simple database search that offers instant results, giving clients a “cost savings” as well as faster turnaround.
Unfortunately, time is money and many CRAs are using time constraints for hiring to their benefit, offering a database search with instant results for a low price to employers. Misguided with inaccurate results, employers are making invalid hiring decisions and in many cases these results end up costing the employer more than the price of a truly all-encompassing pre-employment background screen.
At Global HR Research we make it our first priority to follow the FCRA in all reporting as to ensure the best possible outcome for our clients as well as the candidates who we run consumer reports on. Not only do we require that all adverse information be checked at the county and/or state level, but also we take disputes very seriously and in most cases have these settled within 1-3 business days, allowing the employer to make an educated hiring decision in a timely manner.
By first researching your chosen CRA for litigation history and any controversial information connected to the CRA, you will ensure the best possible outcome for your pre-employment processes. Many companies base their CRA decision on stature and do not research the negative aspects and pending legal issues associated with said CRA. In today’s time, with CRA’s being under a large magnifying glass, it is imperative that all employers research their CRA and confirm their validity and trustworthiness.
About Global HR Research
Global HR Research redefines HR. We believe in simplicity, alongside the improvement of the hiring process. At Global HR Research, we deliver intuitive and diagnostic technology through our talent acquisition, talent screening, and talent assessment solutions. We make it simple for our clients to assess, screen and hire qualified candidates. GHRR’s comprehensive and integrated services provide clients with significant savings in cost, time, and effort. Our services include an all-in-one suite for talent screening, talent assessment, and talent acquisition solutions. Let Global HR Research Redefine your HR. For more information about Global HR Research, visit www.globalhrresearch.com or call (800) 790-1205.
Media Contact: Kelly Durpo
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For more information regarding the lawsuits mentioned in this article, please see:
Case No. 2:10-cv-06850-PBT