False EU-U.S. Privacy Shield Participation Claims Will Still Be Investigated Despite Invalidation of Framework

ESR Top Ten Background Check Trends
Employment Screening Resources® (ESR) Top Ten Background Check Trends for 2021

Written By Employment Screening Resources® (ESR)

The Federal Trade Commission (FTC) will continue to investigate companies that falsely claim participation in the EU-U.S. Privacy Shield Framework that allows the transfer of data from the European Union (EU) to the United States (U.S.) despite the invalidation of the framework, according to the “ESR Top Ten Background Check Trends” for 2021 compiled by leading global background check firm Employment Screening Resources® (ESR).

In July 2020, ESR News reported that the Court of Justice of the European Union (CJEU) invalidated the EU-U.S. Privacy Shield Framework and opened the door for the possible suspension of data transfers from the EU to the U.S. based on the Standard Contractual Clauses (SCCs). According to the CJEU, the Privacy Shield did not provide an adequate level of protection required by the General Data Protection Regulation (GDPR).

Despite the invalidation ruling by the CJEU, the FTC – a government agency that is America’s primary privacy and data security enforcer – has continued to investigate false claims of participation in the EU-U.S. Privacy Shield Framework that misleads consumers. The FTC finalized settlements over such claims with a secure data center in June 2020, a medical services company in July 2020, and a data storage company in October 2020.

Although the Privacy Shield was invalidated, the decision does not affect the validity of FTC investigations of misrepresentations about participation and compliance with the framework. “The Federal Trade Commission remains committed to enforcing the EU-U.S. Privacy Shield and Swiss-U.S. Privacy Shield programs,” Chairman Joseph J. Simons and Commissioners Noah Joshua Phillips and Christine S. Wilson wrote in a statement.

The EU-U.S. Privacy Shield Framework – which officially launched on August 1, 2016 – replaced a previous international agreement called “Safe Harbor” that was invalidated by a European Court of Justice ruling on October 6, 2015. The framework includes seven commonly recognized privacy principles combined with 16 supplemental principles. To learn more about the Privacy Shield, visit www.privacyshield.gov.

“These efforts by the FTC to enforce the Privacy Shield may be the beginning of a broader effort by federal and state agencies that regulate consumer reports to take a closer look at what screening firms are doing, especially in such areas as privacy, truth in advertising, and discrimination,” said Attorney Lester Rosen, founder and chief executive officer (CEO) of ESR and the author of “The Safe Hiring Manual,” a guide for background checks.

“There is some speculation that with a change in administrations that federal agencies, for example, may take a more active role in regulating companies that fall under their jurisdiction, which means there is a possibility that both the Federal Trade Commission and the Consumer Financial Protection Board may step up oversight of background screening firms, which could begin by reviewing public web sites,” explained Rosen.

Rosen – who was the chairperson of the steering committee that founded the Professional Background Screening Association (PBSA) in 2003 and who was awarded the PBSA Lifetime Achievement Award in 2019 – said that “a key walkaway point for screening firms is to review their websites to ensure that representations are accurate, that consumer rights are protected, and that the website contains an appropriate privacy policy.”

Organizations must self-certify to the International Trade Administration (ITA) annually their adherence to the Frameworks. Employment Screening Resources® (ESR) was one of the first adopters of EU-U.S. Privacy Shield Framework with an original certification date of August 12, 2016, less than two weeks after it officially launched. ESR’s active participant page on the list of certified Privacy Shield companies is available here.

Employment Screening Resources® (ESR) – a leading global background check provider that was ranked the number one screening firm by HRO Today in 2020 – received notification from the ITA that its annual submission for self-certification of adherence to the EU-U.S. and Swiss-U.S. Privacy Shield Frameworks had been finalized and were effective as of September 10, 2020. To learn more about ESR, visit www.esrcheck.com.

Since 2008, Employment Screening Resources® (ESR) has annually selected the “ESR Top Ten Background Check Trends” that feature emerging and influential trends in the background screening industry. Each of the top background check trends for 2021 will be announced via the ESR News Blog and listed on the ESR background check trends web page at www.esrcheck.com/Tools-Resources/ESR-Top-Ten-Background-Check-Trends/.

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

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