Background Check Companies Settle FCRA Allegations
Time 2 Minute Read

On November 12, 2013, two companies (the “Defendants”) that provide consumer background reports to third parties, including criminal record checks agreed to an $18.6 million settlement stemming from allegations that they violated the Fair Credit Reporting Act (“FCRA”) when providing these reports to prospective employers.

The plaintiffs alleged that the Defendants, in violation of the FCRA, failed to (1) provide consumers with copies of their consumer reports prior to providing the reports to prospective employers, and (2) follow “reasonable procedures” to “ensure the maximum possible accuracy” of the consumer reports. Specifically, two of the named plaintiffs alleged that the Defendants provided “mixed file” consumer reports to prospective employers (i.e., a consumer report containing information about an individual other than the one who is the subject of the consumer report). According to the plaintiffs, these “mixed file” consumer reports contained criminal convictions wrongly attributed to the plaintiffs, which adversely affected their chances of being hired. Another named plaintiff alleged that her consumer report contained a conviction for theft that had been expunged. The Defendants denied all allegations and maintained that “they complied with the FCRA at all times.”

After more than one year of litigation and three days of mediation, the Defendants agreed to a settlement, which contained a proposed class of consumers who were the subject of a consumer report furnished by the Defendants for employment purposes and whose reports contained a criminal or traffic arrest or conviction during the relevant time period. In addition to the $18.6 million in monetary relief, the Defendants agreed to provide free consumer reports to all class members upon request, an expedited dispute process for class members, and business practice changes designed to enhance the accuracy of future consumer reports. The proposed settlement, filed in the U.S. District Court for the Northern District of Ohio, must be approved by the court.


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