Keep FCRA in the foreground when the subject is background screening

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When the talk turns to Big Data, part of the conversation is about all the public information available about people's lives – and how companies market it to prospective employers, landlords, etc. Two cases just announced by the FTC serve as a cautionary reminder to members of the industry that what they do may be subject to the long-standing consumer protections of the Fair Credit Reporting Act (FCRA).  InfoTrack, an Illinois company, and San Diego-based Instant Checkmate will be paying civil penalties to settle FTC lawsuits that they violated the FCRA.  Is it time for an FCRA refresher at your business?

Instant Checkmate marketed its reports as a way for prospective employers and landlords to investigate applicants.  For example, the company advertised that one of the “GOOD REASONS to get instant criminal checks on anyone right now” was to “check out tenants before they rent.”  It also used a Google Ad Words campaign to make sure its site appeared when people searched for background checks on nannies, babysitters, maids, and housekeepers.  What kind of information would buyers get?  Current and previous addresses, birth certificates, arrest histories, and marriage and divorce records, to name just a few examples.

InfoTrack offered similar services to employers nationwide, including background screening reports with people’s driving records, education and employment information, criminal histories, and even records from sex offender registries.

How does the FCRA come in?  The law defines a “consumer report” as a “communication of any information” by a consumer reporting agency (CRA) that bears on a person’s “credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living” which is used (or expected to be used) as a factor in establishing their eligibility for credit, insurance, employment, or other reasons outlined in the law.

According to the FTC, what Instant Checkmate and InfoTrack were doing triggered the FCRA.  For example, companies covered by the law must follow procedures to assure their reports are as accurate as possible, must take steps to see that those using their reports have permissible purposes for accessing them, and must provide required User Notices explaining key protections for consumers.  The law imposes special requirements when CRAs provide reports containing public record information that could have an adverse effect on a person’s ability to get a job.  In that case, the CRA must either: 1) notify the consumer that it’s reporting the information in the public record; or 2) maintain “strict procedures” – that’s the language in the law – designed to ensure the reported public information is complete and up to date.

You’ll want to read the complaints for specifics of where the FTC says the companies fell short, but one example cited in the lawsuit against InfoTrack offers an object lesson on why FCRA protections are so important to consumers – and how the consequences can be devastating when companies don’t live up to the law.  According to the FTC, the reports InfoTrack provided to prospective employers included information about whether a job applicant was on the National Sex Offender Registry.  The employer would provide the first and last name and the date of birth to help InfoTrack with its search.  The problem was that before the fall of 2011, no date of birth was available for many names on the Registry.  If InfoTrack’s search found more than one person with the same first and last name, it reported a “possible match” to employers and gave them reports that included several different people with the same name who were convicted sex offenders.  Just imagine the consequences for a law-abiding job applicant with the bad luck to have the same name as someone on the Sex Offender Registry.

As part of the settlements, the companies have agreed to change their procedures.  In addition, Instant Checkmate will pay a $525,000 civil penalty.  InfoTrack was hit with a $1 million civil penalty, most of which will be suspended due to its inability to pay.  InfoTrack also will send a notice to each person who was the subject of a report that included mismatched sex offender registry records.

What can other companies learn from these cases?

The FCRA’s definition of “consumer reporting agency” is broad and many companies that may not think of themselves as CRAs are covered nonetheless.  What about disclaiming your status as a consumer reporting agency?  Not so fast.  Instant Checkmate said on its website that it wasn’t a CRA and yet promoted its reports for classic FCRA purposes – to determine eligibility for employment or housing.  The law is clear:  If you walk like a CRA and quack like a CRA, you’re a CRA, regardless of an attempt to run from that label.  Consult the FTC’s Credit Reports page to stay up on the latest.

If you or your clients use reports like this, we have free resources to streamline your compliance efforts. Background Checks: What Employers Need to Know offers tips from the FTC and EEOC. And make sure your real estate clients are familiar with Using Consumer Reports: What Landlords Need to Know.

Another key consideration:  Your city or state may have additional laws limiting your use of this kind of information.



Who can I contact to give approval if a Made in USA label meets FTC requirements?

I live in Florida. I am being asked to fill out a background check. I have been living here for three months (June 15, 2015). What information should they be looking for and what information do I have to give. I know about the top 10 list and I have checked out three and in each it has a comment like "Instant Checkmate does not provide consumer reports and is not a consumer reporting agency. We provide a lot of sensitive information that can be used to satisfy your curiosity, protect your family, and find the truth about the people in your life. You may not use our service or the information it provides to make decisions about consumer credit, employers, insurance, tenant screening, or any other purposes that would require FCRA compliance. " I've checked out some of the FCRA, but, if there is some one out there that could get me to where i need to avoid or all out not fill it out and reference the statute, that would be good. i have a felony for giving some of my prescription meds to a girl (CI).
thank you BG

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