Happy New Year!

Here are two editions of the AGG Compliance News Flash covering the following topics:

  • E-Verify;
  • California’s Consumer Privacy Act;
  • Ban the box and salary history restrictions in the hiring process;
  • Investigation by the Department of Justice into hiring practices;
  • The Fair Credit Reporting Act and who qualifies as an “employee”; and
  • News about the Consumer Financial Protection Bureau.

Click here for the 12/21 edition of the Compliance News Flash.

Click here for the 1/4 edition of the Compliance News Flash.

Check out the latest compliance updates in the Compliance News Flash, which includes quick updates on:

  • The Connor v. First Student case in California and the constitutionality of ICRAA and CCRAA, applicable to employment and tenancy screening.
  • The Consumer Financial Protection Bureau, now the Bureau of Consumer Financial Protection and new leadership.
  • Massachusetts and Ban the Box enforcement actions.
  • An upcoming webinar by my colleagues Kevin Coy and Brad Kelley called The Cybersecurity Landscape: Regulatory Issues for CRAs on June 27, 2018.
  • The Hireright and GIS merger.

Happy Reading!

Please enjoy this week’s Compliance News Flash with blurbs about the largest FCRA-related jury award, litigation involving a public record vendor, the President’s travel ban, the Form I-9, and increased vetting of visa applicants.

Click here to read the Compliance News Flash.

Yesterday I attended an interesting webinar regarding Fair Credit Reporting Act (FCRA) developments.  Susan Camp Stocks from the Consumer Financial Protection Bureau (CFPB) and Katherine Ripley White from the Federal Trade Commission (FTC) participated, along with my colleagues Bob Belair and Kevin Coy. The speakers covered a fair amount of ground on different FCRA issues, including the importance of furnishers of information having written policies and procedures.  However, I want to focus on what they said about the background screening industry.

FTC Comments

  • They are focusing on background screening and in particular the use of criminal history records in employment screening
  • Accuracy of the reports is essential
  • Red flags that background screeners should review/consider when reporting public records — different names or DOBs, multiple entries for the same offense, and the reporting of expunged cases
  • They are working with the Federal Interagency Reentry Council to address accuracy related issues in the criminal justice system
  • They will turn their attention to focus on tenant screening in the next year and it is likely that we will see revised guidance in this area

CFPB Comments

  • Among their policy priorities is consumer reporting
  • It appeared that there is a belief that there is weak oversight of public record providers and that they believe more audits of such providers should be conducted to address accuracy issues
  • Accuracy of the reports is very important to them and they spoke about the enforcement action against General Information Services and e-Backgroundchecks.com to illustrate the point

The Consumer Financial Protection Bureau (CFPB) announced that it has taken action against two large background screening companies.  Yes, you are reading this correctly.  The CFPB…not the Federal Trade Commission, has taken an enforcement action against two background screening companies.  Holy smokes Batman!  This is very big news and screening companies must take note.

Breaking it down.  The Consent Order is about: (i) the accuracy of the reports under section 607(b) of the Fair Credit Reporting Act (FCRA); (ii) public records and section 613 of the FCRA related to notice versus strict procedures; and (iii) the obsolescence rule under section 605(a) of the FCRA.  It is about employment background screening reports to employers.  Action is pursuant to the FCRA. The fines total $13 million.

If you are a background screening company the Consent Order is mandatory reading so you can reflect upon and consider how the allegations/findings are addreseed (or not) by your company.  Here’s what the CFPB alleges about the screening companies:

  • They failed to take basic steps to assure accuracy: The CFPB alleges, among other things, that there was no requirement for employers to provide consumers’ middle names; no written policy for researching consumers with common names or nicknames; and a failure to use an audit process to adequately test the accuracy of the reports provided.
  • They failed to meet certain requirements when reporting public records: this part of the Consent Order blends with the 607(b) allegations about accuracy and failure to maintain appropriate procedures under section 613 of the FCRA.
  • They included impermissible information in consumer reports: The CFPB alleges that both companies failed to take measures to prevent non-reportable civil suit and civil judgment information older than seven years from being impermissibly included in their reports because they did not have sufficient policies and procedures in place.

Important – starting on page 11 of the Consent Order the CFPB spells out what a Compliance Plan should look like. Read it if you are a background screener.  If you need counsel, we can assist.

Yesterday the Government Accountability Office (GAO) released a report on the use of criminal background checks (GAO-15-162) tied to a congressional request.  The title of the report is, “Criminal History Records – Additional Actions Could Enhance the Completeness of Records used for Employment-Related Background Checks”.

The GAO report sought to address “to what extent (1) states conduct FBI record checks for selected employment sectors and face any challenges; (2) states have improved the completeness of records, and remaining challenges that federal agencies can help mitigate; and (3) private companies conduct criminal record checks, the benefits those checks provide to employers, and any related challenges.”  This blog will focus on what the report says about private background screening companies.  Specifically the GAO report found that:

  • The use and number of private companies conducting criminal record background checks for employment screening appears to be increasing because of employer demand;
  • Both the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) are responsible for enforcing provisions of the Fair Credit Reporting Act (FCRA) which are applicable to background screeners, as they are considered “consumer reporting agencies” under the FCRA;
  • According to FTC officials, from FY 2009 – 2014, the “FTC settled 16 complaints against private background screening companies and employers for alleged FCRA violations” and of the 16 complaints, 4 included allegations related to the use of criminal history information for employment purposes (See page 35 of the report);
  • CFPB officials noted that “they have not received many consumer complaints regarding the use of criminal history records in employment background checks” (See page 35 ofthe report); and
  • Private background screening companies generally conduct name-based checks as opposed to fingerprint-based checks, which according to the report, can “decrease the accuracy of the information that the check produces.”  However, use of additional identifiers, such as date of birth, can help mitigate accuracy concerns (See page 38 of the report).

The report concludes on page 39 by saying that “employers’ increasing use of criminal history record checks to determine applicants’ suitability for employment, licensing, or volunteering underscores the need for accurate and complete criminal records–including the final disposition of any criminal charges–and assurances that applicants have an opportunity to challenge or correct potentially inaccurate records.”  The report lays out three recommendations for executive action involving the FBI and states, and those are listed on page 40 of the report.

Background screeners and users of background check reports provided by a background screening company (defined as a consumer reporting agency under the Fair Credit Reporting Act (FCRA)) — the wait is over!  The Consumer Financial Protection Bureau (CFPB) has finally posted on its website a full and intact version of A Summary of Your Rights Under the Fair Credit Reporting Act, in English and Spanish, as required under section 609(c)(1) of the FCRA.  For those of you who previously searched for this document on the CFPB’s website, you will recall that it was about as easy to find as a pot of gold at the end of a rainbow.

The Summary is a critical document which must be provided to, for instance, job applicants during the adverse action process — see FCRA § 604(b)(3)(A)(ii).

Whether you are a user of background check reports or the provider of background check reports, if you operate under the FCRA this is a required document under sections 604 and 606 of the FCRA.  The failure to provide this summary is the subject of litigation, particularly under section 604 which relates to pre-adverse action tied to employment (read prior posts on this).

Join us tomorrow for DPRCRA Live: Privacy at MidYear to learn about the latest developments in the privacy field. Tomorrow’s webinar is another in a series of webinars hosted by my firm, Arnall Golden Gregory LLP, and the Privacy & Consumer Regulatory Practice Group.  This month we will review and discuss some of the biggest events that have occurred in the privacy field to date in 2014.  This webinar will cover the following major events and developments:

  • The FTC’s new Data Broker Report;
  • Wyndham and LabMD – the battle over the FTC’s authority;
  • Updates on data privacy in the European Union and the “right to be forgotten”;
  • EU Safe Harbor;
  • The FTC Spring Privacy Series, including discussions on: mobile device tracking and alternative scoring products;
  • Debt collection in light of the FTC’s settlement with Consumer Portfolio Services; and
  • An update on the past six months on Capitol Hill.

Join AGG Privacy attorneys Montserrat Miller, Joseph Rubin, Kevin Coy and Kelly Gordon Zemil for this one-hour, complimentary webinar. A live Q&A session will follow the discussion.

To Register please click this link.



Every year the federal government is mandated to consider whether to raise the ceiling on allowable charges under section 612(f) of the Fair Credit Reporting Act (“FCRA”) with respect to what a consumer can be charged for certain file disclosures by a consumer reporting agency (“CRA”).  The task was previously handled by the Federal Trade Commission (“FTC”).  It is now handled by the Consumer Financial Protection Bureau (“CFPB”) when that responsibility was transferred from the FTC to the CFPB pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010

The fee originally started at $8.00 in 1997 and over the years has inched upward.  Every January 1st the CFPB is required to consider whether and how much to increase the $8.00 amount referred to in section 612(f)(1)(A)(i) of the FCRA.  After crunching the numbers, the fee remains the same as last year — $11.50.  This is what CRAs may charge a consumer for a file disclosure under section 609 of the FCRA.  Note that there are many instances in which a CRA cannot charge a fee and those are spelled out in section 612 of the FCRA (e.g., free annual disclosure by nationwide CRAs, free disclosure after adverse notice to consumer).

To view the notice in the Federal Register click here.  The effective date is January 1, 2014.

In a recent amicus brief before the U.S. Court of Appeals for the Ninth Circuit, the Federal Trade Commission (“FTC”) and Consumer Financial Protection Bureau (“CFPB”) – double the pleasure – teamed up to provide their interpretation of section 605(a) of the Fair Credit Reporting Act (“FCRA”), the reporting of “other adverse items of information” and the seven year reporting period.

The matter, Moran v. The Screening Pros LLC (Case No. 12-57246), involves a consumer report used for tenant screening purposes.  The report, made in 2010, listed a 2000 misdemeanor drug charge that was dismissed in 2004.  This is the key fact and this is where the FTC and CFPB claim that the Plaintiff is correct in saying that the consumer report provided to the propery manager should not have included the misdemeanor drug charge as the information was outside the seven year window.

For brevity sake, the issue at hand is the FCRA restriction on a consumer reporting agency (“CRA”) from including obsolete information in a report.  Enter section 605(a) of the FCRA.  Long and short of it, the FTC and CFPB take the position that the FCRA restricts the reporting of “any other adverse item of information…which antedates the report by more than seven years.”  Page 11 of the amicus brief states:

 “An adverse item, when it occurs, starts the seven-year period.  Later related events that are not in themselves adverse do not reopen the period.  Thus, in the case of a criminal charge that is eventually dismissed, the dismissal is not an adverse item that starts its own seven-year reporting period.  It is simply the disposition of a truly adverse item, the underlying criminal charge.”

The FTC and CFPB made an analogy in their position to obsolete debts and the fact that later, non-adverse events relating to the debt, do not extend the period in which a CRA may report the fact that the debt was referred to collection.

Word to the Wise – CRAs should review their practice with respect to the reporting of dismissals pursuant to section 605(a).  While this is just an amicus brief that does not carry the weight of law, it may nonetheless portend to future events given that the CFPB has rulemaking authority under the FCRA.

If you would like a copy of the amicus brief, please contact me by email at montserrat.miller@agg.com.