FCRA Infringement – Big Name? You’re Still Not Safe From Lawsuits

What do InfoTrack, AutoZone, Home Depot, Instant Checkmate and Aaron’s furniture stores all have in common?

No, they’re not all featuring awesome Black Friday deals.

They’re actually all facing, or have faced, Fair Credit Reporting Act (FCRA)-related lawsuits in 2014. Unfortunately, they’re joining the ranks of some other Big Name companies like Whole Foods, Disney and Domino’s who’ve struggled with similar class action lawsuits.

So what’s the deal? Is there some new law that employers don’t know about? Are the latest technologies making them vulnerable in their search for qualified candidates? The answers, respectively, are NO and KINDA SORTA.

Let’s backtrack a little here and talk FCRA nuts and bolts. This federal consumer protection statute has been around a for a long time (1970) and, coupled with the Consumer Credit Protection Act, was designed to set guidelines for employers to protect employees, especially when it come to background screening.

According to the Federal Trade Commission (FTC), “The Fair Credit Reporting Act (FCRA) helps ensure the accuracy, fairness, and privacy of the information provided by consumer reporting agencies. The FCRA also holds consumer reporting agencies and the creditors that provide the information in your credit report responsible for correcting inaccurate or incomplete information in your report.”

The FCRA protects you and your financial interests if any of your personal information relating to your credit data and/or credit report is inaccurate, compromised and somehow used against you, like not getting a job. Which brings us to what the heck is happening today with the uprising in lawsuits. Why does it seem like all of a sudden these Big Name companies are violating the law?

There are several reasons. And there are ways to stay on the straight and narrow. Read on.

More Candidates Are Scrutinizing the Background Screening Process. In this dog eat dog world of ours, everyone wants a job and when a person doesn’t get it, he/she wants to know why. Were they simply not the best candidate? Did they interview poorly? Or, was their something behind the scenes that went on? Applicants are more savvy about the hiring process – in part because of the wealth of information on job searches and hiring procedures available on the internet – and they know more than employers often give them credit for. The FCRA may not be the first law on a jilted candidates’ lips, but when he/she investigates his/her distrust of the situation a little further, chances are FCRA is going to pop up. What you need to do as an employer is to re-visit your hiring policies and procedures and make sure you’re in compliance with every hiring law on the books. If you don’t have the HR staff necessary to do this, insource an expert. Whatever fee you pay them will be paltry if you’re hit with a lawsuit and need to defend yourself and/or pay out a former applicant.

Beware of Employment Lawyers. These guys and gals know what they’re doing and they know that class action lawsuits are big time money and name makers. They’re also wise to the fact that employment law changes so frequently that employers may not have the time to keep up. That translates into big money lawsuits. This post claims that a successful FCRA claim can net between $100 – $1000 per violation. One way to stay ahead of attorneys is to always work with an accredited background screening agency who understands the rules, regulations and roles in compliance when working as a Credit Reporting Agency, like Active Screening.

Get It In Writing. A standard job application form with a box for candidates to mark ‘yes,’ they’re willing to submit to a background check isn’t sufficient. In fact, it’s illegal and that where some companies find themselves in trouble. In order for an applicant to legally consent to a background check, he must fill out a form separate from any other job-related forms. There can be no waivers, no exceptions, no false signatures (especially when it comes to e-signatures. You need to make sure your candidate has properly signed off on the check before giving the screening agency the go-ahead). Yes, this is a headache and requires more paperwork but that’s the way the law is and will save you time and money in the end (just ask Whole Foods and Domino’s who have both been accused of this).

The FCRA can feel complicated. But we hope this information helps. Now… back to your regularly scheduled Black Friday shopping list.

This entry was posted in Applicant-Entry Solutions, Background Screening, General, Human Resources, Industry Solutions, News, References & Credentialing and tagged , , , , , , , , , , , , , by Patricia Carlson. Bookmark the permalink.

Patricia Carlson is a content writer who specializes in B2C and B2B inbound marketing. She blogs regularly for clients about the background screening and finance industries, and generates newsletters, white papers and email campaigns for a variety of businesses. Patricia also produces a heavy rotation of editorial material for home design, law enforcement, and family magazines. She’s been writing professionally for more than a dozen years, and for Active Screening for more than two of those. Check out LinkedIn for a roster of Patricia's clients and links to published works. When she’s not interviewing sources or researching trends, she’s living a fast-paced Florida life questioning the antics of her two young children, partner and mischievous cat. Patricia loves to talk tennis and TV on Twitter - give her a shout @pattycfreelance.
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