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$13M penalty for background check errors that cost jobs, hurt reputations
Two of the nation's largest employment background screening providers must pay $13 million after a federal agency found that inaccuracies in their reports may have cost applicants jobs or hurt their reputations.
The Consumer Financial Protection Bureau ordered General Information Services, based in Chapin, S.C., and its affiliate, e-Background-checks.com, based in Dallas, to pay $10.5 million in relief to people harmed by the inaccuracies and $2.5 million in civil penalties.
Each person affected should get about $1,000. The two companies collectively generate and sell more than 10 million background reports annually. The consent order involved 11,500 consumers who got background checks between July 21, 2011, and Dec. 31. 2014.
According to the CFPB, the companies violated the Fair Credit Reporting Act when they failed to use basic procedures to match public records with the correct consumer and to audit reports to ensure their accuracy.
Nearly 70 percent of criminal history disputes that consumers filed with General Information Services resulted in some change or correction to the information in their background report, the bureau found.
"As a result, the companies provided prospective employers with inaccurate reports that included criminal records attached to the wrong consumers, dismissed and expunged records, and misdemeanors reported as felony convictions," the bureau said in a statement. "These inaccuracies can result in the denial of employment, missed economic opportunity, and reputational harm to otherwise qualified applicants."
The companies also failed to prevent certain information from illegally being included in reports, such as non-reportable civil suit and civil judgment information older than seven years, the agency said.
In a joint statement responding to the consent order, General Information Services and its affiliate said they believe they complied with the Fair Credit Reporting Act's requirement to use reasonable procedures to maximize accuracy. But they also "acknowledge that every background screening agency must engage in continuous improvement," and said they have agreed to the terms.
The CFPB has ordered the two companies to identify consumers affected by their conduct. They must also retain an independent consultant to review their policies and staffing levels, develop an audit program and revise their processes to assure report accuracy, such as with algorithms that use middle names to distinguish between reports.
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