Shepherd, Finkelman, Miller & Shah, LLP
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Accurate Background Inc. Allegedly Violates FCRA

Accurate Background Inc. ("Accurate" or the "Company"), a background check company, was hit with a class action lawsuit that alleged the Company unlawfully performed consumer background checks for employment purposes.

The Fair Credit and Reporting Act ("FCRA") governs the dissemination of personal information, like consumer reports, that may be used for employment decisions. There are two safeguards protecting an individual's privacy under the FCRA. The first safeguard found under 15 U.S.C. Section 1681(a)(4) provides consumers the power to control the transfer or dissemination of their personal information in a consumer report for employment purposes. Before obtaining the consumer's report, there must be a clear and conspicuous disclosure provided to the consumer about the usage of the report. Moreover, the potential employer must receive the consumer's written permission before obtaining the report. The second safeguard is located in the same section and governs the behavior of consumer reporting agencies that actually develop and furnish the consumer reports. The agency can transfer a report only if it receives a certification from the employer that states the consumer authorized the employer to obtain the report. The Plaintiff in the action against Accurate, Donald Evans, alleged that Accurate violated the FCRA by furnishing thousands of consumer reports without confirming that consumers had actually authorized the Company to disseminate their personal information to prospective employers.

According to the Complaint filed in the U.S. District Court for the Central District of California, Accurate furnished ("Amazon") a consumer report regarding Evans for employment purposes without having obtained a certification from Amazon that it had complied with the relevant FCRA provisions. Instead, Accurate had included a "catch-all" statement on all of the credit reports it furnished to its clients that read, "client agrees and that its ordering of the report is in strict compliance with any applicable local, state, and federal laws and regulations." Essentially, Plaintiff alleged that Accurate did not manage individual certifications for each and every credit report as required; rather, Accurate had streamlined the process by including a broad statement in its reports that shifted its duty onto its clients.

There are large implications that could come from the outcome of this case. If the court finds for the Plaintiff, agencies performing consumer background checks would be required to strictly adhere to the rules regarding certifications found under the FCRA. On the other hand, should the court find for Accurate, consumer background checks may be used in the future without a consumer's consent and/or knowledge.

The legal team at SFMS has substantial experience litigating employment matters. If you have any questions regarding this subject or this posting, please contact Alec Berin ([email protected]) or Chiharu Sekino ([email protected]). We can also be reached toll-free at (866) 540-5505.

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