A Class Action Lawsuit Bonanza: FCRA Lawsuits Increase Almost 60% In One Month

According to a report by WebRecon, from September 1, 2017 to September 30, 2017, 556 consumers filed FCRA (Fair Credit Reporting Act) complaints, 245 of which are class actions (44.1%). That’s a 58.4% increase from August 2017.

Year to date, 3,328 FCRA lawsuits have been filed!

Here’s the good news for Cisive and its clients! With 3,328 FCRA suits filed this year, NOT ONE is against Cisive or any of its clients!! That’s because Cisive works with its clients to establish and enforce strict compliance procedures to eliminate exposure and provides them with the best tools to comply.

Compliance is key!

Noncompliance can be costly for everyone! At Cisive, we ensure accuracy and FCRA compliance through primary source verification and perfecting of criminal records. Our background screening philosophy is always to minimize exposure from disparate impact while reducing negligent hiring risk.

The growing number of FCRA lawsuits listed below is indicative of the current litigious environment and shows that companies need more help than ever to ensure compliance.

January 2017 – 418 filings

February 2017 – 256 filings

March 2017 – 406 filings

April 2017 – 266 filings

May 2017 – 378 filings

June 2017 – 386 filings

July 2017 – 302 filings

August 2017 – 351 filings

September 2017 – 556 filings

For more information on how to keep your company out of harm’s way, read Cisive’s informative white paper, FCRA Required Pre-decision and Adverse Action – Failure to Notify Opens the Door for a Class Action Lawsuit.

Contact a Cisive Specialist today at 1-866-557-5984 or sales@cisive.com.

ALERT: Remove That Liability Waiver From Your FCRA Disclosure

Despite the fact that the Ninth Circuit Court found that it is a “willful” FCRA violation to include a liability waiver in the FCRA Disclosure, it is still a fairly common practice.

Employers who use third party vendors to conduct background checks on applicants and employees are required by the FCRA to provide a disclosure in writing stating that the background report may be used for employment purposes. It is very clear in the FCRA that the required disclosure form must be its own standalone document.

In recent years, the number of class actions against employers for FCRA violations has risen dramatically. The stakes are high for non-compliance. In early 2017, a background screening company agreed to pay $1.6 million to a class of over 65,000 job applicants for including a liability waiver in the FCRA disclosure for the background checks it conducted on applicants for its client M-1, LLC. In addition, the employer M-1, LLC was found responsible to pay statutory damages of between $100 and $1,000 per violation to the over 65,000 class members, plus punitive damages and attorneys’ fees and costs.

Companies such as Domino’s Pizza ($2.5M), Publix ($6.8M), Whole Foods ($803K), ClosetMaid Corporation ($1.8M), and Disneyland are just some of the companies that have been or are currently embroiled in class actions for including a liability waiver in their FCRA Disclosure form.

Recommendations for Employers

If you conduct background checks on your applicants and employees, it’s time to review your process and ensure that you remove any liability waivers, releases, and indemnity clauses as they are not permitted under the Ninth Circuit’s ruling. Also, as a best practice, remove any other information or terms in the documentation which could violate the FCRA requirement that it consist solely of the disclosure. This will help to ensure you avoid a costly and time-consuming class action.

If you are uncertain if your hiring process is FCRA compliant, the time is now to contact a Cisive Specialist at 1-866-557-5984 or click here.


Avoiding Litigation in the Era of Surging FCRA Class Action Suits

Fair Credit Reporting Act (FCRA) litigation has increased 47 percent in the last year according to ACA International. Background screening is a vital hiring tool for employers. However, amendments to the FCRA have significantly increased the rights of applicants and employees. Therefore, employers must ensure compliance with the detailed requirements of the FCRA. Adverse Action violations seem to be the most prevalent.

The FCRA requires that employers disclose to applicants that a background report may be obtained for employment purposes, and obtain signed authorization from applicants before procuring a background report.  Further, the FCRA requires that before an employer makes an adverse decision in whole or in part based on the contents of a consumer report that the applicant be given notice of potential adverse action, be provided with a copy of the report and a copy of the prescribed Summary of Rights.  Special attention should be given to the words “before” and “in whole or in part.”  Those words have been the subject of much discussion and litigation.  If a company makes a decision not to hire, promote or retain, and then sends out all required documents with a “pre-adverse” notification, it has not adhered to the law. If a company receives a potentially disqualifying consumer report, but then tries to sidestep the pre-adverse notification saying that they “found a better candidate”, it is in violation of the FCRA.

Following a reasonable time after the pre-adverse notification and deliverables allowing the applicant to dispute the reported information, the FCRA requires that a final adverse action notification be made. If any person takes any adverse action with respect to any applicant that is based in whole or in part on any information contained in a consumer report, the person shall:

  1. Provide oral, written, or electronic notice of the adverse action to the applicant;
  2. Provide to the applicant orally, in writing, or electronically:  A) the name, address, and telephone number of the consumer reporting agency  that furnished the report to the person; and B) a statement that the consumer reporting agency did not make the decision to take the adverse action and is unable to provide the applicant the specific reasons why the adverse action was taken; and
  3. Provide to the applicant an oral, written, or electronic notice of the consumer’s right to: A) obtain a free copy of a consumer report on the applicant from the consumer reporting agency , which notice shall include an indication of the 60-day period under that section for obtaining such a copy; and B) dispute with a consumer reporting agency the accuracy or completeness of any information in a consumer report furnished by the agency.

The above requirements seem relatively simple on the surface, but have turned out to be harder to implement properly in practice. Many companies have learned that the hard way after finding themselves in the crosshairs of legal action filed against them.

Litigation Avoidance

There are no fail-safe solutions to avoid litigation, but employers can take steps to ensure compliance and mitigate risk. Part of the compliance problem may be that company employees who are tasked with initiating the notices are uncertain as to when notices are required or what must be in those notices. The problem is further exacerbated by having insufficient tools with which to track the timing, delivery and receipt of such notices. Some employers are understandably cautious about outsourcing this function. The FCRA makes it absolutely clear that the employer is ultimately responsible for compliance in this area, but this function is often best outsourced to the Consumer Reporting Agency (CRA) performing the background, and is the practice that Cisive recommends.

Establishing and enforcing strict compliance procedures can certainly reduce exposure.  The difficulty that many companies have when it comes to complying with FCRA notification requirements is that the pre-adverse action notification is a triggered event that is not required for every employment background, and the final adverse action notification is also a triggered event that is not required for every pre-adverse action notification.

Also worthy of careful consideration are effects of various ban-the-box laws that alter the period to respond to adverse information that an applicant has, which can as a result alter the timing of any final adverse action letter. Proper sequencing of these events also requires close coordination with the employer’s CRA. Because of the irregularity of these events and the coordination required, employers are often ill-equipped to execute them properly, and recruiters and managers are often not fully aware of the employer’s responsibility.

Education of recruiters and managers helps. However, proper execution requires that they have the tools to comply. The best tools contain systematic, gated controls implemented by electronic workflow that recognize the triggers and guide those responsible through the compliance process.  These tools exist today and employers should aggressively engage in evaluation, selection, and implementation of the right tools to realize compliant pre-adverse and adverse notification and avoid expensive and brand-destroying class-action litigation.


FTC Releases Tenant Screening Information on FCRA Compliance

Law book  The Federal Trade Commission (FTC) recently released information on what landlords and their tenant background screening companies need to know to ensure compliance with the Fair Credit Reporting Act (FCRA).

Tenant background checks can include a variety of information, including rental and eviction history, credit, or criminal records. These reports are also known as consumer reports. It is important to know the steps that must be taken before obtaining a consumer report and after adverse action is taken based on that report in order to be FCRA compliant.

Some of the tips provided are:

  • Follow reasonable procedures to assure accuracy
  • Get certifications from your clients
  • Provide your clients with information about the FCRA
  • Honor the rights of applicants and tenants

Interested in learning more? Below are the links from the FTC to review for detailed information.

What Tenant Background Screening Companies Need to Know About the Fair Credit Reporting Act

Using Consumer Reports: What Landlords Need to Know


To learn more about how CARCO ensures complete compliance with the FCRA, click here or call 1-866-557-5984 to speak with a CARCO Specialist.

FCRA compliance is EVERYTHING in 2016

Compliance puzzle   As a hiring manager, you should know that legal compliance is one of the most critical parts of background screening your new hires.  A review of the class action suits for FCRA violations brought about in 2015 reveals that most of the suits could easily have been avoided by using the proper forms and processes for hiring.  Simple processes like using a standalone disclosure document could save your company a lot of money and grief.  Companies like BMW, Whole Foods, Home Depot, and Food Lion, to name a few, learned that the hard way. 

  BMW fined $1.6 Million

Whole Foods fined $803,000

Home Depot fined $1.8 Million

Food Lion fined $3 Million


In 2014, Publix paid one of the highest fines of $6.8 million for FCRA violations!  These numbers alone should be a wake-up call to all companies to review their hiring processes for FCRA compliance.


Don’t assume your background screening company uses FCRA compliant procedures either.  In 2015, a major background screening company paid $13 million in restitution and fines to settle their violations of the Fair Credit Reporting Act (FCRA) charged by the Consumer Financial Protection Bureau (CFPB).


CARCO can help with your compliance needs!  We’ve been keeping our clients out of harm’s way since 1977 by knowing the law, not taking short cuts, and collaborating with our clients on proper hiring processes and procedures.  We even created our own Onboarding Solution which ensures FCRA compliance at each step of the new hire onboarding process.


Contact a CARCO Specialist today to review your hiring process – 866-557-5984 or click here.

Do you know your rights under the FCRA? If not, the CFPB has the document for you.

The Consumer Financial Protection Bureau (CFPB) has posted “A Summary of Your Rights Under the Fair Credit Reporting Act” on their website. The summary document is available in both English and Spanish  and highlights “major rights under the FCRA” and provides contact information for job applicants in specified types of businesses who seek to discuss their FCRA rights with the corresponding federal regulator.


Click here to access the document:  http://www.consumerfinance.gov/learnmore/

FCRA Class Actions Against Employers – New Trend?

FTC LogoThere is an interesting article in the SHRM Federal Resources Section about the emerging trend of FCRA Class Actions against employers. The article, written by Allen Smith, SHRM’s manager of workplace law content, discusses the importance of HR professionals to be familiar with FCRA requirements when conducting background checks on employees and applicants.


Employers have responsibilities before they conduct a background check and after if they take adverse action against someone based partly on information obtained from that background check.



Employers must provide a written disclosure to the employee or applicant that consists solely of the disclosure that a consumer report may be obtained. The employee or applicant must provide written permission for an employer to obtain the report.



Employers must provide a pre-adverse action notice to the employee or applicant if it intends to take adverse action based partly on the report’s contents. That notice must include a copy of the consumer report and the statutory summary of rights.


Five Business Days Later

The employer must provide an adverse action notice that includes:

  • The name and contact information of the consumer reporting agency that provided the report.
  • A statement that the consumer reporting agency did not make the adverse decision and cannot explain why the decision was made.
  • A statement outlining the individual’s right to get a free disclosure of his or her report from the consumer reporting agency if the request is made within 60 days.
  • A statement explaining the individual’s right to dispute the accuracy or completeness of any information in the report directly with the consumer reporting agency.


The article goes on to list action items to mitigate class-action risk, but the bottom line is employers need to be familiar and compliant with the law and should “take measures to fortify against class-action risk”.