Written By ESR News Blog Editor Thomas Ahearn

With 2021 drawing to a close and 2022 closer on the horizon, Employment Screening Resources (ESR) – a service offering of ClearStar – is reviewing blogs about background screening issues written during this year taken from the ESR News Blog. Here are some noteworthy stories from 2021 that dealt with background screening.

CFPB Recommends Limits On FCRA Class Action Lawsuit Monetary Awards

On January 5, 2021, the Consumer Financial Protection Bureau (CFPB) released a two-volume “Taskforce on Federal Consumer Financial Law Report” that made recommendations including Congress amending the Fair Credit Reporting Act (FCRA) to impose appropriate limits on monetary awards in FCRA class action lawsuits.

“The FCRA sets statutory damages for a willful violation of any provision of the Act in an amount not less than $100 or more than $1,000, in addition to unlimited punitive damages, plus court costs and attorney fees. It is not clear to the Taskforce why Congress omitted a class action damage cap in the FCRA,” the report stated.

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Company to Pay $20 Million to Settle FTC FCRA Case Involving Credit Reports

In May 2021, a smart home security and monitoring company agreed to pay $20 million to settle charges filed by the Federal Trade Commission (FTC) that claimed the firm allegedly violated the Fair Credit Reporting Act (FCRA) that regulates background screening by improperly obtaining credit reports to qualify consumers for financing.

Under the settlement – the largest for an FTC FCRA case – the company will pay a $15 million civil penalty and $5 million to compensate injured consumers. The complaint filed for the FTC by the U.S. Department of Justice (DOJ) also claimed violations of the Red Flags Rule for failing to implement an identity theft prevention program.

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U.S. Supreme Court Rules “Concrete Harm” Needed to Sue for FCRA Violations

On June 25, 2021, the Supreme Court of the United States ruled in the case of TransUnion LLC v. Ramirez that a plaintiff must suffer “concrete harm” resulting from a defendant’s statutory violation of federal law such as the Fair Credit Reporting Act (FCRA) to have sufficient standing to sue under Article III of the U.S. Constitution.

“To have Article III standing to sue in federal court, plaintiffs must demonstrate, among other things, that they suffered a concrete harm. No concrete harm, no standing,” Justice Brett M. Kavanaugh wrote in the opinion with Chief Justice John G. Roberts Jr. and Justices Samuel A. Alito Jr., Neil M. Gorsuch, and Amy Coney Barrett.

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PBSA and CDIA Submit Amicus Letter to CA Supreme Court for DOB Redaction

On July 15, 2021, the Professional Background Screening Association (PBSA) and the Consumer Data Industry Association (CDIA) submitted an amicus letter to the California Supreme Court about an opinion prohibiting the display of dates of birth (DOBs) in records used by consumer reporting agencies (CRAs) for background checks.

“If this Court does not reverse the opinion, criminal background checks – which make most employment in this State possible – will be severely delayed, and in many instances they will no longer be possible at all,” the PBSA and CDIA wrote in the letter, referring to the opinion in the case of All of Us or None of Us v. Hamrick.

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PBSA and HR.com Release Fifth Annual Survey of Background Screening Trends

In August 2021, the Professional Background Screening Association (PBSA) – a non-profit trade organization representing the background screening industry – and HR.com’s HR Research Institute (HRRI) released their 5th annual survey of background screening entitled “Background Screening: Trends in the U.S. and Abroad.”

The survey found background screening is widely utilized across the globe, with 93 percent of all organizations reporting they conducted screening. While background screening was nearly universal among organizations with a location in the U.S. (95 percent), it was less common among organizations with no U.S. locations (79 percent).

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EEOC Launches Initiative on Use of Artificial Intelligence (AI) in Hiring Decisions

On October 28, 2021, the U.S. Equal Employment Opportunity Commission (EEOC) – which enforces federal laws prohibiting employment discrimination – launched an initiative to ensure that Artificial Intelligence (AI) and other emerging tools used in hiring and other employment decisions comply with federal civil rights laws.

“Artificial intelligence and algorithmic decision-making tools have great potential to improve our lives, including in the area of employment. At the same time, the EEOC is keenly aware that these tools may mask and perpetuate bias or create new discriminatory barriers to jobs,” EEOC Chair Charlotte A. Burrows stated in a press release.

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CFPB Advisory Opinion Affirms CRAs Using “Name-Only Matching” Violate FCRA

On November 4, 2021, the Consumer Financial Protection Bureau (CFPB) issued an advisory opinion to affirm that consumer reporting agencies (CRAs) that use “name-only matching” for records are not using “reasonable procedures to assure maximum possible accuracy” as required by the federal Fair Credit Reporting Act (FCRA).

“This advisory opinion focuses on one method of matching being used in the industry, known as ‘name-only matching.’ This method is especially likely to lead to inaccuracies in consumer reports,” CFPB Director Rohit Chopra said in a Statement Regarding the Advisory Opinion to Curb False Identity Matching.

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Michigan Supreme Court Adopts Rule on Date of Birth (DOB) Redaction

On December 6, 2021, the Michigan Supreme Court adopted a rule – ADM File No. 2017-28 – that will amend an order of May 22, 2019, amending Rule 1.109 of the Michigan Court Rules regarding the redaction of dates of birth (DOBs) from court records used as identifiers by background screening firms. The rule takes effect April 1, 2022.

Under ADM File No. 2017-28, the Michigan State Court Administrative Office (SCAO) “will maintain a list of authorized individuals who may have access to a party’s date of birth contained in a court record for purposes of verifying the identity of that particular person without the need to present a stipulation to the court.”

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“Clarity in Consumer Disclosures Act” Would Create Model Forms for FCRA

On December 9, 2021, two U.S. Representatives introduced the “Clarity in Consumer Disclosures Act” that would direct the Consumer Financial Protection Bureau (CFPB) to create clear, plain-language model forms for consumer reports so that employers can fulfill the requirements of the federal Fair Credit Reporting Act (FCRA).

Under the FCRA, employers may only use consumer reports for employment purposes if they follow strict consumer disclosure and certification requirements. However, there is currently no uniform direction for the content or format. The result is confusion for employers and consumers, as well as numerous lawsuits.

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Federal “Ban the Box” Law “Fair Chance Act” Takes Effect December 20, 2021

On December 20, 2019, former United States President Donald J. Trump signed into law the “National Defense Authorization Act (NDAA) for Fiscal Year 2020” (S. 1790) that included a “Ban the Box” bill called the ‘‘Fair Chance to Compete for Jobs Act of 2019’’ or ‘‘Fair Chance Act (FCA)’’ that would take effect December 20, 2021.

In order to give ex-offenders a chance to find work in the U.S. Federal government, the FCA will “Ban the Box” and prohibit most Federal agencies and contractors from asking about arrest and conviction history on job applications and delay background checks until a conditional job offer has been extended to applicants.

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Happy New Year from ClearStar and ESR!

ClearStar and ESR look forward to working with and for our clients, partners, and the public in 2022. Best wishes to you and yours from everyone at ClearStar and ESR. Since New Year’s Day (January 1, 2022) is on a Saturday, ClearStar and ESR offices will be closed a day early to observe this holiday on Friday, December 31, 2021.

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