Written By ESR News Blog Editor Thomas Ahearn
October 29, 2020, the Los Angeles County District Attorney’s Office announced that an “online people finder and background check provider” was ordered to pay $775,000 in penalties, fees, and restitution for a civil law case that found they automatically charged customers for ongoing subscriptions without their express consent.
Under a judgment entered in Santa Clara County Superior Court, the background check company was fined $700,000 in penalties, ordered to pay $50,000 in restitution and $25,000 in investigative costs, and must have transparency with consumers about automatically renewing people-finding services. The company now must:
- Clearly and conspicuously disclose its automatic-renewal terms;
- Get consumers’ affirmative consent to the terms through a separate checkbox before charging for an automatic renewal or continuous service;
- Email consumers a confirmation of the transaction after they pay, which clearly includes the automatic-renewal terms;
- Allow consumers to easily cancel the subscriptions, including online, effective upon request; and
- Avoid using misleading online sales information and payment mechanisms.
Online “subscriptions” and other automatically recurring charges often come after “free trials” where consumers need to cancel in time to avoid the charges. Federal and state law requires businesses to make these auto-renewals clear to consumers and to get their “express, affirmative consent” – before they collect any money.
A task force of local prosecutors found that the background check firm was automatically renewing customer payments without their express prior consent as required by federal and state law. The company cooperated with prosecutors to reach this resolution and has taken steps to correct its violations, according to a news release.
Not all background check companies are the same. Employment Screening Resources® (ESR) – a leading global background check provider – is accredited by the Professional Background Screening Associaton (PBSA), has annual SOC 2® audits, and was named the top screening firm in 2020. To learn more, visit www.esrcheck.com.
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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