CFPB Orders Background Check Firms to Pay $13 Million for Alleged Inaccurate Reports

CFPB

Written By ESR News Blog Editor Thomas Ahearn

The Consumer Financial Protection Bureau (CFPB) is ordering two of the nation’s largest employment background check firms to correct their practices, provide $10.5 million in relief to harmed consumers, and pay a $2.5 million civil penalty for allegedly failing to take steps to ensure the information they reported about job applicants was accurate, according to a news release on the CFPB website.

“Today, we are holding two of the largest companies in this market accountable for cleaning up the quality of their reports,” CFPB Director Richard Cordray stated in the news release about the order. Cordray also added that the two background check firms that were fined “failed to take basic steps to provide accurate background screening reports to employers about job applicants.” By entering into a consent decree, the respondents have consented to the Order without admitting or denying any findings of facts or conclusion of law.

The CFPB – a federal agency responsible for consumer protection in the financial sector – claims that the firms violated the Fair Credit Reporting Act (FCRA) by failing to employ reasonable procedures to assure the maximum possible accuracy of information contained in reports provided to potential employers of consumers. Under the terms of the CFPB consent order, the two screening firms are required to:

  • Provide $10.5 million in relief to harmed consumers.
  • Revise their compliance procedures.
  • Retain an independent consultant.
  • Develop a comprehensive audit program.
  • Pay a civil monetary penalty of $2.5 million.

The CFPB claims the “serious inaccuracies” reported by the background check firm and its affiliate potentially affected the eligibility of consumers for employment and caused them reputational harm. The two firms collectively generate and sell more than 10 million consumer reports about job applicants each year to prospective employers that include criminal history records along with other types of data.

The Dodd-Frank Wall Street Reform and Consumer Protection Act authorized the creation of the CFPB which has the authority to take action against institutions or individuals engaging in unfair, deceptive, or abusive acts or practices or violating federal consumer financial laws. The CFPB consent order is at: http://files.consumerfinance.gov/f/201510_cfpb_consent-order_general-information-service-inc.pdf.

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