In a case representing the first time the Federal Trade Commission (FTC) has charged a background screening company that delivers reports to employers with violating the Fair Credit Reporting Act (FCRA), a leading background screening firm, also known as a consumer reporting agency (“CRA”), has agreed to pay a $2.6 million penalty to settle charges that it violated the FCRA multiple times. A press release from the FTC about the settlement is available at: The FTC charged that the CRA violated the FCRA as required by law by failing to use reasonable procedures to assure the maximum possible accuracy of information it provided, failing to give consumers copies of their reports, and failing to reinvestigate consumer disputes. A copy of the Stipulated Final Judgment and Order for Civil Penalties, Permanent Injunction, and Other Equitable Relief is available at: In addition to the $2.6 million civil penalty, the second largest civil penalty the FTC has obtained under the FCRA, the settlement specifically prohibits the named CRA from:

  • Failing to maintain reasonable procedures to ensure that its consumer report information is as accurate as possible;
  • Failing to provide consumers with information in their files in a timely manner;
  • Requiring consumers to obtain a copy of their report before the company will conduct a dispute reinvestigation;
  • Failing to provide consumers with the results of a dispute reinvestigation; and
  • Failing to comply with the requirements for consumer reporting agencies that use public record information.
The FTC press release states that in its capacity as a CRA, the company named in the lawsuit and settlement “provides background reports that contain information about prospective and current employees to help thousands of employers make decisions about hiring and other employment-related issues.” These reports qualify as “Consumer Reports” under the FCRA, the federal law promoting the accuracy and privacy of information in the files of the nation’s credit reporting companies. The FTC’s complaint alleges that the screening company violated the FCRA by:
  • Failing to take reasonable steps to ensure that the information in the reports was current and reflected updates, such as the expungement of criminal records, so that employers sometimes received information incorrectly listing criminal convictions on individuals’ records.
  • Failing to follow reasonable procedures to prevent the same criminal offense information from being included in a consumer report multiple times and failing to prevent obviously inaccurate consumer report information from being provided to employers and that these failures led to consumers to being denied employment.
  • Failing to conduct investigations of disputed items in a consumer’s file after being notified of a dispute, failing to require consumers who wanted to dispute information in their file to have a copy of the report before the company would start a reinvestigation, and failing to tell consumers who did not have a copy of their report to request one before they would reinvestigate.
  • Failing to provide consumers with written notification that it had reported public record information about them to employers when it was being reported.
The Complaint for Civil Penalties, Permanent Injunction, and Other Equitable Relief is available at: For more information about background checks, visit Employment Screening Resources (ESR) – ‘The Background Check Authority’ and a nationwide background screening firm accredited by The National Association of Professional Background Screeners (NAPBS®) – at, call 415.898.0044, or email [email protected]. Sources: About Employment Screening Resources (ESR): Employment Screening Resources (ESR) – ‘The Background Check AuthoritySM’– provides accurate and actionable information, empowering employers to make informed safe hiring decisions for the benefit for our clients, their employees, and the public. ESR literally wrote the book on background screening with “The Safe Hiring Manual” by Founder and CEO Lester Rosen. ESR is accredited by The National Association of Professional Background Screeners (NAPBS), a distinction held by a small percentage of screening firms. By choosing an accredited screening firm like ESR, employers know they have selected an agency that meets the highest industry standards. For more information about Employment Screening Resources (ESR), visit, call 415.898.0044 or 888.999.4474 (Toll Free), or email [email protected]. About ESR News: The Employment Screening Resources (ESR) News blog – ESR News – provides employment screening information for employers, recruiters, and jobseekers on a variety of topics including credit reports, criminal records, data privacy, discrimination, E-Verify, jobs reports, legal updates, negligent hiring, workplace violence, and use of search engines and social network sites for background checks. For more information about ESR News or to send comments or questions, please email ESR News Editor Thomas Ahearn at [email protected].]]>