Fair Credit Reporting Act and Criminal Records

How to protect your clients from unlawfully reported background check reports

Sharon M. DietrichCommunity Legal Services, Inc.

Philadelphia, PA215-981-3719

sdietrich@clsphila.org

Tanya KoshyEast 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

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.

Widespread Use of Commercially Prepared

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 resultsClass 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?

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?

Did Verasystems violate FCRA?

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 assistanceSee 15 USC Sect. 1681j.CFPB list: http://files.consumerfinance.gov/f/201207_cfpb_list_consumer-

reporting-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

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

What can you do to help your clients:

Sharon M. DietrichCommunity Legal Services, Inc.

Philadelphia, PA215-981-3719

sdietrich@clsphila.org

Tanya KoshyEast Bay Community Law Center

Berkeley, CA 510-548-4040

tkoshy@ebclc.org

Questions?