The Consumer Financial Protection Bureau has penalized two of the largest employment background screening companies in the nation with fines and relief payments for allegedly reporting inaccurate information about job applicants. The consent order can be found here. The action marks the Bureau’s first foray into regulating background checks.
The CFPB said General Information Services and its affiliate, e-Background-checks.com Inc., included unreportable and inaccurate information in reports they provided to prospective employers. The companies violated the Fair Credit Reporting Act by failing to employ reasonable procedures to assure the maximum possible accuracy of the information contained in reports provided to consumers’ potential employers. Also, they allegedly included civil suit and civil judgment information older than seven years, which is impermissible information in consumer reports under the FCRA.
“General Information Services and its affiliate failed to take basic steps to provide accurate background screening reports to employers about job applicants,” CFPB Director Richard Cordray said in a news release. “We are holding two of the largest companies in this market accountable for cleaning up the quality of their reports.”
The two companies collectively generate and sell more than 10 million background reports about job applicants to prospective employers annually. The CFPB said the reports include criminal history information and civil records, among other types of data, which is used to determine the hiring eligibility of applicants and to make other types of employment decisions. The CFPB said the reports potentially harmed applicants’ employment eligibility and their reputations.
The CFPB has ordered the companies to pay $10.5 million in relief to thousands of victims. The companies must identify consumers negatively affected by their conduct and pay approximately $1,000 to each affected consumer. In addition, the companies are being required to revise their policies and procedures, including creating a new internal audit program. These procedures include using algorithms to distinguish records by middle name and match common names and nicknames, using consumer dispute data to determine the root causes of errors, and using software to identify and reconcile discrepancies. The audit program requires that at least twice a year, both companies will evaluate and adjust their procedures. Also, the companies are being required to hire an independent consultant to oversee the proper implementation of the required changes. Finally, the CFPB is assessing a $2.5 million civil penalty.