FCRA Lawsuit against Bank of America Denied

Gavel

Written By ESR News Blog Editor Thomas Ahearn

A federal judge in the California Central District Court has denied a class action lawsuit that claimed Bank of America NA violated the federal Fair Credit Reporting Act (FCRA) by obtaining consumer reports for background checks on prospective and current employees using authorization disclosures that did not comply with the FCRA. A copy of the ruling is available at http://www.esrcheck.com/file/Newton-v-Bank-of-America_cv03714_Judgment.pdf.

The FCRA – a U.S. federal law that regulates the collection, dissemination, and use of consumer information – prohibits the procurement of a consumer report for employment purposes unless:

  • (i) A clear and conspicuous disclosure has been made in writing to the consumer at any time before the report is procured or caused to be procured, in a document that consists solely of the disclosure, that a consumer report may be obtained for employment purposes; and
  • (2) The consumer has authorized in writing (which authorization may be made on the document referred to in clause (i)) the procurement of the report by that person.

In granting a motion for summary judgment, U.S. District Judge Consuelo B. Marshall found that Bank of America did not violate the FCRA since the plaintiffs in the case signed a criminal background check authorization form that was titled “ELECTRONIC AUTHORIZATION FOR CONSUMER REPORTS” in bold and capitalized font and stated in part:

In connection with your application for employment . . . understand that consumer reports . . . may be requested or made on you including consumer credit, criminal records, driving record, education, prior employer verification, workers compensation claims and others . . . . By electronically signing below. . . . [y]ou hereby authorize and request, without reservation, any present or former employer, school, police department, financial institution, division of motor vehicles, consumer reporting agencies, or other persons or agencies having knowledge about you to furnish [name of background check firm deleted] with any and all background information in their possession regarding you, in order that your employment qualifications may be evaluated.

A second authorization form used by Bank of America was titled “Request to Initial Authorization for Investigation” in bold font and stated in part:

In connection with my employment or application for employment with [Bank of America] I authorize the Bank to request and obtain a consumer report that may contain information about my prior employment. . . prepared by [name of background check firm deleted] a consumer reporting agency. I understand that [name of background check firm deleted] may utilize and report information from my former employers. I request, authorize and consent to the release and disclosure of any and all such information to the Bank by [name of background check firm deleted].

Judge Marshall ruled that both authorization forms used by bank of America were “clear and conspicuous,” disclosed that a consumer report may be obtained for employment purposes, were in a document that consisted solely of the disclosure, and that the plaintiffs each authorized the procurement of their consumer reports. The Court found that the authorization forms used by Bank of America met the FCRA’s disclosure requirements. The case is Newton v. Bank of America, National Association et al, 2:14-cv-03714, in the California Central District Court.

The ruling comes on the heels of another dismissal of a FCRA class action lawsuit against a major corporation. As reported on the ESR News Blog in March 2015, a judge in the Northern District of California Court granted a motion to dismiss in a class action lawsuit that claimed Paramount Pictures violated the FCRA requirement for disclosure of consumer reports. A copy of the order is at http://www.esrcheck.com/file/Peikoff-v-Paramount-Pictures_Order-Granting-Defendant-Motion-to-Dismiss.pdf.

Class action lawsuits for FCRA violations even if no one is actually harmed have increased in 2015, as predicted by Employment Screening Resources (ESR) founder and CEO Attorney Lester Rosen. This trend was one of the ESR Top Ten Background Check Trends for 2015 selected by Rosen at the start of the year. For more information about background check services, please call toll free 888.999.4474 or visit http://www.esrcheck.com.

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