Fair Credit Reporting Act and
Criminal Records
How to protect your clients from unlawfully reported
background check reports
Sharon M. Dietrich
Community Legal Services, Inc.
Philadelphia, PA
215-981-3719
sdietrich@clsphila.org
Tanya Koshy
East Bay Community Law Center
Berkeley, CA
510-548-4040
tkoshy@ebclc.org
What we will cover today
• Background – the industry, applicability of
FCRA
• Duties FCRA creates in the background check
context, including for employers
• Many common problems with background
checks that may be FCRA violations
• How to investigate an inaccurate report and
dispute it
Widespread Use of Commercially
Prepared Background Checks
 92% of surveyed companies perform
background checks on employee applicants.
 78% of the above companies completely
outsourced their criminal background checks,
while 10% only partially outsourced their
criminal background checks.
Background on the Background Checkers
• Industry consists of thousands of companies,
including a few huge ones (First Advantage,
Altegrity, Sterling)
• Trade ass’n: National Association of
Professional Background Screeners (NAPBS)
• Dissident group: Concerned CRAs
Resources on the Industry
• SEARCH, Report of the National Task Force on
the Commercial Sale of Criminal Justice
Record Information (2005)
http://www.search.org/files/pdf/RNTFCSCJRI.pdf
• NCLC, Broken Records How Errors by Criminal
Background Checking Companies Harm
Workers and Businesses (2012)
http://www.nclc.org/issues/broken-records.html
FCRA Applicability
• Fair Credit Reporting Act (FCRA) originally
created for traditional credit reports
• Widespread agreement that FCRA applies to
background checkers as “consumer reporting
agencies” (CRAs)
• Minimum regulation of industry beyond FCRA
lawsuits (FTC is enforcement agency; shares
FCRA jurisdiction with CFPB)
FCRA Coverage Issues
• FCRA does not apply to public records.
• Serious and complicated issues around
preemption. Resource: National Consumer
Law Center’s Fair Credit Reporting.
FCRA Duties – Background Checkers
• CRAs may not report arrests or other adverse
information (other than convictions of crimes) which
are more than seven years old, provided that the
report does not concern employment of an
individual who has an annual salary that is $75,000
or more. 15 U.S.C. §§ 1681c(a)(5), 1681c(b)(3).
See Serrano v. Sterling Testing Systems
No time limit on reporting convictions, alas.
FCRA Duties – Background Checkers (cont.)
• CRAs must use “reasonable procedures” to
insure “maximum possible accuracy” of the
information in the report. 15 U.S.C.
§1681e(b).
Not a strict liability standard.
FCRA Duties – Background Checkers (cont.)
• A CRA reporting public record information for employment
purposes which “is likely to have an adverse effect on the
consumer’s ability to obtain employment” must either:
(1)notify the person that the public record information is being
reported at the time it is provided to the user and provide the
name and address of the person who is requesting the
information or
(2)the CRA must maintain strict procedures to insure that the
information it reports is complete and up to date. 15 U.S.C.
§1681k.
FCRA Duties - Employers
• The employer must provide a clear written notice to
the job applicant that it may obtain a consumer
report. 15 U.S.C. § 1681b(b)(2). It also must obtain
written authorization from the job applicant to get
the report. 15 U.S.C. § 1681b(b)(3).
• If the employer intends to take adverse action based
on the consumer report, a copy of the report and a
Federal Trade Commission (“FTC”) Summary of
Rights must be provided to the job applicant before
the action is taken. 15 U.S.C. § 1681b(b)(3).
FCRA Duties – Employers (cont.)
• Afterwards, the employer, as a user of a
consumer report, must notify the job
applicant that an adverse decision was made
as a result of the report and must provide,
among other things, the name, address and
telephone number of the CRA and the right to
dispute the accuracy or completeness of the
report. 15 U.S.C. § 1681m(a).
Common FCRA violations involving
background checks
• Inaccurate reports (data is simply incorrect)
Examples:
• Wrong grade of offense
• Incomplete disposition, where one is available
Common FCRA violations involving
background checks (cont.)
• Mismatched records of identically named
people, resulting in reports on the wrong
person (false positives)
Features:
• Very common names
• 50-state searches
• Inadequate matching criteria
Common FCRA violations involving
background checks (cont.)
• Dated information in their privately
maintained “shadow databases”
Examples:
• Not removing expunged cases
• Not reflecting corrections in public records
• Not reflecting appeal results
Class litigation on expungements.
Common FCRA violations involving
background checks (cont.)
• “Over-reporting” information with a
disclaimer when uncertain of a match
Example: “There is a conviction with Mr. X’s
name. This may or may not be your Mr. X.”
Little law on disclaimers, and what there is is
mixed.
Common FCRA violations involving
background checks (cont.)
• Presenting criminal record information in
misleading formats prejudicial to the worker
Examples:
• Large amounts of information for each charge,
resulting in reams of paper
• Repeating upper and lower court dockets of
same case (issue in HireRight litigation)
Common FCRA violations involving
background checks (cont.)
• Employers don’t provide report before
decision, or at all
Why does it matter?
• Correct errors
• Opportunity to explain record (but beware of
Vlasek decision - lack of actual damages)
Investigating an FCRA Case
Client comes with a background check report
that he says shows cases that are not his.
He’s got evidence to prove it (reports showing
that he has a clean record).
Why investigate? How?
Did Verasystems violate FCRA?
 CRA Verasystems created its database of criminal record
information in 2006. It bought records from the
California Superior Court and sent court investigators to
all superior courts in each county in California. This was
the last time they updated their system.
 In 2008, Daniel successfully petitioned the court to
reduce his felony theft case to a misdemeanor.
 In 2010, Verasystems issued Daniel’s background check,
reporting his conviction as a felony.
 Has Verasystems violated any reporting requirements?
 By not updating their database within the last five years,
Verasystems has failed in their obligation to use
reasonable procedures to ensure maximum possible
accuracy of the information in the report in violation of
15 U.S.C. § 1681e(b)).
 Verasysystems has an obligation under 15 U.S.C. §
1681k to maintain strict procedures to ensure that
public record information is complete and up to date
Free Copy of Consumer File under
FCRA
•
•
•
•
Once every 12 months
Notified of adverse action
State law entitles you to more
You are an identity theft victim or think the file may
have fraudulent information
• You are unemployed or get public assistance
See 15 USC Sect. 1681j.
CFPB list: http://files.consumerfinance.gov/f/201207_cfpb_list_consumerreporting-agencies.pdf
Are you required to dispute to preserve
litigation claims?
• No. However:
– Your client may benefit from a correct report.
– The CRA often will fail to make a correction,
creating new claims under 15 USC Sect. 1681n and
1681o. Such a claim could succeed even if a
“reasonable procedures” claim does not.
– CRA’s failure also supports claim for punitive
damages.
Four Elements of Claims Based on
Inaccurate Reports
(1) CRA failed to follow procedures to ensure
maximum possible accuracy
(2) Report contained inaccuracies
(3) Client suffered injury (includes emotional
distress)
(4) Injury was caused, at least in part, by the
inaccuracy
What can you do to help your
clients:
 If your client is denied employment based on their criminal
record but has not received a copy of the background
check from employer  pro per letter requesting report
 If your client has a background check with FCRA violations:
 Write dispute letter (do not call)  send certified mail
to confirm receipt
 Include supporting documentation and specify
violations
 Advise client to document past employment, efforts to
find another job
What can you do to help your
clients:
 Counsel all clients about rights w/r/t background checks
 Give flyers to every client who comes to clients
 Ask about employment denials/background checks in the
past two years
 Consultation worksheet
 Track issues/background check companies in
database/spreadsheet
 Develop pro bono relationships
 You are a source of clients, potential classes
 Co-counseling opportunities
Questions?
Sharon M. Dietrich
Community Legal Services, Inc.
Philadelphia, PA
215-981-3719
sdietrich@clsphila.org
Tanya Koshy
East Bay Community Law Center
Berkeley, CA
510-548-4040
tkoshy@ebclc.org