Class Action Lawsuit Claims Bank Violated FCRA with Background Checks

Written By ESR News Blog Editor Thomas Ahearn

A federal court in Virginia has denied a motion for summary judgment in a class action complaint that claims Wells Fargo Bank violated the Fair Credit Reporting Act (FCRA) when performing background checks on job applicants by coding some as “ineligible” prompting adverse action and including a release of liability in authorization forms.

In the decision in Manuel v. Wells Fargo Bank, N.A. in the United States District Court for the Eastern District of Virginia, Senior United States District Judge Robert E. Payne denied the Defendant’s motion for summary judgement in the case that alleges Wells Fargo violated the FCRA 15 USC § 1681 et seq on two counts:

• Count One alleges a violation of §1681b (b) (2) (A) of the FCRA, which requires that “a person may not procure a consumer report, or cause a consumer report to be procured, for employment purposes with respect to any consumer, 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 (ii) 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.”
• Count Two alleges a violation §1682b(b) (3) (A) (i) of the FCRA. §1681b (b) (3) (A) {i) requires that “in using a consumer report for employment purposes, before taking any adverse action based in whole or in part on the report, the person intending to take such adverse action shall provide to the consumer to whom the report relates: (i) a copy of the report; and (ii) a description in writing of the rights of the consumer under this subchapter, as presented by the Bureau under section 1681g(c) (3) of this title.”

The plaintiff was offered a job with Wells Fargo based upon the successful completion of a background check. The plaintiff completed a consent form on Wells Fargo’s third-party background check vendor website which contained language releasing Wells Fargo, its vendor, and third parties from liability arising from the background check.

When the background check revealed several convictions on the plaintiff’s record, Wells Fargo coded the plaintiff as “ineligible” which prompted their background check vendor to begin the “adverse action” protocol. The plaintiff received a “Pre-Adverse Action Notice,” a copy of the report, and a summary of rights under the FCRA.

The plaintiff disputed the report and appealed pursuant to Wells Fargo’s appeal process.  The vendor then generated a revised report that still contained the disputed convictions, and Wells Fargo sent an adverse action notice to the plaintiff advising him that Wells Fargo would not consider him further for the employment position.

The plaintiff claims Wells Fargo violated the FCRA requirement of “a clear and conspicuous” disclosure in a document that consists solely of a disclosure that a background check may be obtained because that documents also contained language releasing the company and others from liability arising from the background check.

The plaintiff also claims that Wells Fargo’s coding of him as “ineligible” in the background check vendor’s system and initiating the adverse action protocol violated the FCRA requirement that the pre-adverse action notice, a copy of the report, and summary of rights be provided to the individual before the adverse action is taken.

In denying the motion for summary judgement, the court found that the plaintiff could assert claims that the initial disclosure was not in a document consisting solely of the disclosure and that the “ineligible” coding was an adverse action under the FCRA. The decision is available at https://www.esrcheck.com/file/Manuel_v_WellsFargo.pdf.

Employment Screening Resources (ESR) reminds readers that any allegations made in class action lawsuits are not proof that a business or background check vendor violated any law, rule, or regulation. For more blogs about FCRA class action lawsuits, visit https://www.esrcheck.com/wordpress/tag/class-action-lawsuits/.

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