Consumer Reporting Agency Reaches $3.3 Million Settlement in Lawsuit Over Alleged FCRA Violations

Written By ESR News Blog Editor Thomas Ahearn

A $3.3 million settlement has been reached in a class action lawsuit that claimed a Consumer Reporting Agency (CRA) allegedly violated the federal Fair Credit Reporting Act (FCRA) when providing background check reports on job applicants for employment purposes, according to a report from Top Class Actions.

Top Class Actions reports that Plaintiff Michael A. Kelly claimed he was denied a job because of inaccuracies in a background check report from the CRA and at least one background check report “provided to Kelly’s employer contained false and derogatory information.”

Top Class Actions reports the CRA procured a “consumer report” – the technical term that the FCRA uses to describe a background check report for employment purposes – about Kelly from the nationwide credit reporting agency TransUnion in December 2013 and subsequently sold the consumer report to Kelly’s employer.

“Mr. Kelly suffered real world and actual harm in his employment because of the inaccurate, incomplete, and out of date information in that consumer report,” the amended class action complaint claimed, adding the CRA did not ensure the accuracy of consumer reports it maintained as required by the FCRA.

Under FCRA compliance procedures regarding the accuracy of a consumer report: Whenever a consumer reporting agency prepares a consumer report it shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates.

Top Class Actions reports the CRA “denies the allegations but agreed to settle the FCRA class action lawsuit to avoid the burden, risk, and uncertainty of ongoing litigation.” The settlement was preliminarily approved on June 28, 2018, and the final approval hearing for the settlement is on November 1, 2018.

In October 2018, the Federal Trade Commission (FTC) announced that a CRA that screened tenants agreed to pay $3 million to settle charges of failing to take reasonable steps to ensure the accuracy of information that caused renters to be falsely associated with criminal records in violation of the FCRA.

Enacted in 1970, the FCRA promotes the accuracy, fairness, and privacy of consumer information in consumer reports, protects consumers from willful or negligent inclusion of inaccurate information in those reports, and regulates the collection, dissemination, and use of consumer information.

ESR White Papers about Reasons for FCRA Lawsuits

Employment Screening Resources® (ESR) offers two complimentary white papers that examine the causes that lead to FCRA lawsuits: “Common Ways Prospective or Current Employees Sue Employers Under the FCRA” and “Common Ways Consumer Reporting Agencies are Sued Under the FCRA.”

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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