An employment background screening firm that provides consumer reports to companies nationwide will pay $2.6 million to settle Federal Trade Commission charges that it violated the Fair Credit Reporting Act (FCRA).
HireRight Solutions Inc. was charged with failing to use "reasonable procedures to assure the maximum possible accuracy of information provided," failing to give consumers copies of their reports and failing to reinvestigate consumer disputes as required by law.
It marks the second-largest civil penalty obtained by the FTC under the FCRA. Only the $10 million civil penalty against consumer data broker ChoicePoint Inc. in 2006 was larger. It also is the first time the FTC has charged an employment background screening firm with violating the FCRA.
HireRight Solutions, in its role as a consumer reporting agency, provides background reports with 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 did not take reasonable steps to ensure the information 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, in many cases, the reports included the records of the wrong person. The FTC alleged that the various inaccuracies led to consumers being denied employment or other employment-related benefits.
Consumer reporting agencies under the FCRA must allow consumers to access their own information and dispute any inaccuracies.
To do so, 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. 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 cases, HireRight Solutions failed to comply with these rules, the FTC alleges. Finally, the complaint alleges 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.
Along with 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.
The largest civil penalty case obtained by the FTC involving ChoicePoint was settled in January 2006. In October 2009, the company settled charged that it violated the original settlement. A year later, more than 14,000 ChoicePoint breach victims received checks.