FTC urges background report providers to comply with FCRA – Employment Verification Resources

By Thomas Ahern, Digital Content Editor

“The FTC’s recently announced case is a reminder that if you use keywords to promote your product for purposes covered by the Fair Credit Reporting Act (FCRA), it’s time to act and pay attention to the FCRA’s consumer protections.” – the message says. Business blog on the Federal Trade Commission (FTC) website.

A blog by Sina Gresin cites an FTC lawsuit requiring two “reference reporting providers” to pay $5.8 million to settle charges that they allegedly violated the Fair Credit Reporting Act (FCRA), among other things. failing to ensure that their consumer reports are as accurate as possible.

In the complaint, the FTC said two California companies marketed as “people-finding services” that allow users to look up background reports for a fee actually act as consumer reporting agencies (CRAs) that conduct employment and tenant background checks that must follow FCRA requirements.

“According to the complaint, the companies bought thousands of advertising keywords from Google and Microsoft to ensure that (their) ads appeared in response to searches related to employment or tenant screening. For example, they bought keywords including (‘pre-employment screening’),” the blog explained.

Under the FTC’s proposed order, which must be approved by a federal judge before it can take effect, the two “reference report providers” and their affiliates would be required to pay a $5.8 million fine. Other provisions of the FTC’s proposed order included the following, which provides:

• Require companies to establish and implement a comprehensive monitoring program to regularly review, evaluate, and determine the extent to which each company is fully or partially operating as a CRA and to ensure that they are in compliance with FCRA requirements;
• Permanently ban them from failing to comply with the FCRA when they are working as CRAs;
• Permanently enjoin them from misrepresenting the accuracy of their reports or making similar misrepresentations as alleged in the complaint; and
• Require them to require endorsers to disclose any material connections and monitor any endorsers with material connections to the company to ensure that they disclose such connections.

Under section 1681e(b) of the FCRA, which deals with the accuracy of consumer reports, all CRAs are required to “follow reasonable procedures to ensure that the information” contained in a consumer advance report is as accurate as possible. Failure to do so is a violation of the FCRA, which is partially enforced by the FTC.

In addition to failing to ensure the accuracy of their reports, the FTC said the companies violated the FCRA by providing advance reports to people who had no authorized purpose for receiving them, and by failing to investigate and respond to consumer complaints about inaccuracies in their reports.

In 2014, one of two “reference report providers” agreed to settle FTC allegations that the company had previously violated the FCRA by failing to take reasonable steps to ensure that its prior reports were accurate and that users had a valid reason for obtaining them. . A fine of 525,000 dollars was imposed by the court decision.

Companies that provide reference reports for background checks can find the FTC’s guidance on FCRA compliance in What Employer Background Check Companies Need to Know About the Fair Credit Reporting Act and What Tenant Background Check Companies Need to Know About the Fair Credit Reporting Act.

Employment Screening Resources (ESR) is a service offering from ClearStar, a leading CRA and HR technology company specializing in background checks, drug testing and occupational health. ClearStar offers workforce screening solutions that are fully FCRA compliant. Contact ClearStar to learn more.

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