An employment background screening company that provides consumer reports to companies nationwide will pay $2.6 million to settle Federal Trade Commission (FTC) charges that it violated the Fair Credit Reporting Act (FCRA) by failing to use reasonable procedures to assure the maximum possible accuracy of information it provided, failing to give consumers copies of their reports and failing to reinvestigate consumer disputes, as required by law.
The case against HireRight Solutions, Inc. represents the first time the FTC has charged an employment background screening firm with violating the FCRA, and is the second-largest civil penalty that the FTC has obtained under the Act. Only the 2006 $10 million civil penalty against consumer data broker ChoicePoint, Inc. was larger. The Department of Justice filed the complaint and proposed order against HireRight on the FTC's behalf. Under the settlement, the company also is barred from continuing its alleged illegal practices.
In its capacity as a consumer reporting agency, HireRight Solutions, provides background reports that contain information about prospective and current employees to help thousands of employers make decisions about hiring and other employment-related issues. Under the FCRA, the company's reports qualify as "consumer reports." They contain public-record information, including the individuals' criminal history.
The FTC alleges that in many cases, when it provided consumer reports to employers, HireRight Solutions failed to take reasonable steps to ensure that the information in the reports was current and reflected updates, such as the expungement of criminal records. Because of this, the FTC charged, employers sometimes received information that incorrectly listed criminal convictions on individuals' records.
In addition, according to the FTC's complaint, HireRight Solutions failed to follow reasonable procedures to prevent the same criminal offense information from being included in a consumer report multiple times, failed to follow reasonable procedures to prevent obviously inaccurate consumer report information from being provided to employers, and in numerous cases even included the records of the wrong person. The FTC alleged that these failures led to consumers being denied employment or other employment-related benefits.
Under the FCRA, consumer reporting agencies must allow consumers to access their own information and dispute any inaccuracies. To do this, the consumer reporting agency must clearly and adequately disclose information in their file to a consumer who requests it. Next, within 30 days of being notified that a consumer wants to dispute the information in his or her report, the consumer reporting agency must conduct a reasonable investigation to determine whether the information is inaccurate, record the status of the information, or delete it from the file. Finally, the consumer reporting agency must notify consumers in writing of the results of this reinvestigation of their file within five days of when it's completed.
In numerous instances, HireRight Solutions failed to comply with these FCRA requirements, the FTC alleges. This includes failing to conduct investigations of disputed items in a consumer's file after being notified of a dispute, requiring consumers who wanted to dispute information in their file to have a copy of the report before the company would start a reinvestigation and telling consumers who did not have a copy of their report to request one before they would reinvestigate, delaying the dispute process and making it more difficult. In addition, according to the FTC, HireRight Solutions closed complaint investigations without providing written notice of the results to consumers, as required.
Finally, the complaint contend that HireRight Solutions failed to provide consumers with written notification that it had reported public record information about them to employers when it was being reported, as the FCRA requires.
In addition to the $2.6 million civil penalty, the settlement prohibits HireRight Solutions from:
- failing to maintain reasonable procedures to ensure that its consumer report information is as accurate as possible;
- failing to provide consumers with information in their files in a timely manner;
- requiring consumers to obtain a copy of their report before the company will conduct a dispute reinvestigation;
- failing to provide consumers with the results of a dispute reinvestigation; and
- failing to comply with the requirements for consumer reporting agencies that use public record information.