Complaint Claims Violations of California ICRAA by Consumer Reporting Agency

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Written By ESR News Blog Editor Thomas Ahearn

A complaint filed in Superior Court of California County of San Francisco claims a Consumer Reporting Agency (CRA) has violated the Investigative Consumer Reporting Agencies Act (ICRAA), California Civil Code § 1786 ET SEQ. The ICRAA “regulates the procurement, content, and use of criminal, credit, medical, and other background checks by investigative credit reporting agencies and employers.”

The complaint states that the Defendant – a California based CRA – performs background checks for employment purposes. The ICRAA imposes strict requirements on both CRAs and California employers. In order to protect valuable privacy interests and the accuracy of the personal information in background checks, the ICRAA contains numerous provisions about what must be disclosed to consumers.

The California legislature passed the ICRAA in 1975 to regulate the investigative CRAs and protect California consumers from abuses in the background check industry. As set forth in the preamble of the ICRAA, the Legislature found that: “There is a need to ensure that investigative CRAs exercise their grave responsibilities with the fairness, impartiality, and respect for the consumer’s right to privacy.”

With the dramatic increase in the use of background checks by employers and technological capabilities of CRAs charged with protecting personal information, the Legislature amended the ICRAA in 2010 through California Senate Bill 909 (SB 909) which addressed the practice of “off-shoring” background check services that process the personally identifying information (PII) outside of the United States.

According to analysis of SB 909: With the increase of U.S. companies contracting for off-shore services, there is a substantial likelihood that the applicant’s personally identifiable information ends up offshore, beyond U.S. privacy law, in a foreign call center or data processing location where there is little, if any, privacy protection. Statistics show off-shoring is a substantial risk to U.S. privacy and data security.

California Civil Code section 1786.20(d) requires an investigative consumer reporting agency doing business in this state to “conspicuously post” on its primary Internet Web site information describing its privacy practices with respect to its preparation and processing of investigative consumer reports. The privacy statement shall conspicuously include, but not be limited to, both of the following:

  • (A) A statement entitled “Personal Information Disclosure: United States or Overseas,” that indicates whether the personal information will be transferred to third parties outside the United States or its territories.
  • (B) A separate section that includes the name, mailing address, e-mail address, and telephone number of the investigative consumer reporting agency representatives who can assist a consumer with additional information regarding the investigative consumer reporting agency’s privacy practices or policies in the event of a compromise of his or her information.

The complaint (Case Number: CGC-16-549717) also claims the CRA’s disclosures are “incomplete and unlawful” and violated the ICRAA by “failing to disclose to Plaintiffs and other consumers how their personal information would be handled and whether their information would be offshored.” The Plaintiffs bring this action for damages, costs, and expenses of litigation and attorneys’ fees.

Employment Screening Resources (ESR) is a member of Concerned CRAs, a group of like-minded Consumer Reporting Agencies (CRAs) concerned about the future of the employment background screening industry. Concerned CRAs members pledge to avoid offshoring the personal information of Americans overseas to foreign countries. More information is available at www.concernedcras.com.

To alert U.S.-based employers and job seekers about the potential dangers caused by “offshoring,” ESR founder and CEO Attorney Lester Rosen wrote a complimentary whitepaper entitled ‘The Dangers of Offshoring Personally Identifiable Information (PII) Outside of United States’ that details the hazards of sending PII to counties that are well beyond the reach of U.S. privacy and identity theft laws.

Employment Screening Resources (ESR) is accredited by the National Association of Professional Background Screeners (NAPBS) and undergoes yearly SOC 2 audits to protect the security, confidentiality, and privacy of the consumer information used for background checks. To learn more about ESR, please call toll free 888.999.4474 or visit www.esrcheck.com.

ESR reminds readers that any allegations made in litigation are not proof that a business or CRA violated any law, rule, or regulation. There have been only allegations in the pleading stage and no factual adjudications. The fact that a demand for a jury trial has been made in lawsuits does not mean there has been a finding of any liability or that any facts have been determined or any settlement entered into at the current time.

NOTE: Employment Screening Resources (ESR) does not provide or offer legal services or legal advice of any kind or nature. Any information on this web site is for educational purposes only.

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