Court Ruling Underscores Best Practices for Handling Consumer Disputes about Accuracy of Criminal Records in Background Checks

By Lester S. Rosen, Attorney at Law and CEO of Employment Screening Resources® (ESR)

court cases A ruling by a federal judge in a case in Minnesota on March 26, 2013 underscores the need for background screening firms to carefully review their processes for re-investigation of consumer disputes.

A bank employee was terminated after a background check revealed a criminal conviction.  The employee disputed the findings, eventually leading to a lawsuit in federal court alleging various theories of liability based upon allegations of inaccurate records and for an inadequate investigation of the consumer’s dispute.

The background firm brought a motion for summary judgment, arguing that even if the Court assumed the Plaintiffs allegations were correct, as a matter of law the case should be dismissed.   The Court dismissed various allegations concerning inaccurate records.  However, the Court ruled the case could  go forward on the basis that the Consumer Reporting Agency (CRA), the legal name for a background firm, did not obtain and review the actual court records to examine the consumer’s claim.  The Court reasoned that a jury could find under the facts of this case that a failure to review the actual court records when confronted with a consumer complaint of inaccuracy was unreasonable and a failure to comply with the federal Fair Credit Reporting Act (FCRA) rules concerning a consumer dispute.

The FCRA sets forth a detailed set of rules and procedures where a consumer disputes the results of a consumer report.  Among other rules, FCRA, Section 611(a)(1), requires that a CRA shall “conduct a reasonable reinvestigation to determine whether the disputed information is inaccurate and record the current status of the disputed information, or delete the item form the file….”

FCRA Section 611(a)(4) states that where there is a consumer dispute a CRA shall “review and consider all relevant information submitted by the consumer . . . with respect to such disputed information.”

The CRA argued that it could reasonably make a determination by comparing the information the consumer sent to the information already in the background report.  However, the Court ruled that a reasonable jury could find that failure to examine the underlying court documents as part of a dispute re-investigation could form the basis of a jury verdict against the screening firm.

The Court noted that:  “The act of filing a dispute suggests that something is wrong, and jury could reasonable conclude that Defendant’s employees should have done a bit more to confirm that nothing disputed was incorrect on the Record.”

The court did not rule that a CRA had an absolute legal duty to examine the underling records for every dispute.  However, based upon the specific facts in this case, the failure to obtain and review the underlying court records created a factual issue that merited the right to have a jury decide the issue.

This Court opinion reinforces that a best practice where there is consumer concern as to the accuracy of a criminal record is for a background firm to obtain the court record and to examine the underlying records for accuracy and completeness.

In its opinion, the Court also raised issues about the sufficiency of the method in which a consumer is allowed to submit the details of a complaint to a background firm.  The Court noted that:

  • Furthermore, Defendant’s argument that Plaintiff’s dispute was short does not necessarily excuse Defendant for what may be considered a cursory reinvestigation, especially because the “Notice of Consumer Dispute” form filled out by Plaintiff was tailored in such a way that it encouraged short responses. For example, the form contained a prompt that read: “Please indicate the screening elements that contain information you wish to dispute the accuracy and/or completeness of that appears in your consumer report.” …Plaintiff responded to this prompt by writing down the case number of his 1997 arrest….Additionally, the second part of the form asked the consumer to “provide a description of the information that you are disputing.” …. Plaintiff answered in the manner prompt required—by describing the information. A description of information is not necessarily as lengthy or comprehensive as an explanation for why that information is wrong. The Court finds it compelling that Defendant did not delve deeper into information provided on a form designed to require little information. (Emphasis added)

The Court’s opinion underscores that a consumer should be given every opportunity to fully express their concerns without any limitations on any forms.

It should be noted that this case is only in the pre-trial stage and the fact that a court ruled that an issue should go before a jury does not mean there had been a finding that a screening firm has any liability.   It is the policy of Employment Screening Resources® (ESR) not to identify screening firms involved in litigation where no facts have been determined or no settlement entered into.

This case serves to emphasize the fact that employment background checks are extremely regulated and that an employer is well advised to select an accredited screening firm that emphasizes accuracy and legal compliance.

Employment Screening Resources® (ESR)

The National Association of Professional Background Screeners (NAPBS®) created the Background Screening Agency Accreditation Program (BSAAP) for a singular cohesive industry standard and a widely recognized seal of approval. To become accredited, a Consumer Reporting Agency (CRA) must pass a rigorous onsite audit of its policies and procedures as they relate to six critical areas: Consumer Protection, Legal Compliance, Client Education, Product Standards, Service Standards, and General Business Practices. Employment Screening Resources® (ESR) has successfully proved compliance with the BSAAP and is formally recognized as NAPBS Accredited. For more information about accreditation, visit