A federal regulator took action against two of the largest employment background screening report providers for failing take basic steps to assure the information reported about job applicants was accurate.
The Consumer Financial Protection Bureau (CFPB) claims that the serious inaccuracies reported by General Information Services and its affiliate, e-Background-checks.com, Inc. (BGC), potentially affected consumers' eligibility for employment and caused reputational harm. The agency is ordering the companies to correct their practices, provide $10.5 million in relief to harmed consumers, and pay a $2.5 million civil penalty.
The CFPB found that the companies failed to use basic procedures for matching public records information to the correct consumer. For example, the Bureau found that GIS did not require employers to provide consumers' middle names, and neither company had a written policy for researching consumers with common names.
The Bureau also found that GIS failed to use an audit process to adequately test the accuracy of the reports provided. The Bureau found that, between 2010 and 2014, nearly 70 percent of criminal history disputes consumers filed with GIS resulted in some change or correction to the information in the consumer's background report. As a result, the companies provided prospective employers with inaccurate reports that included criminal records attached to the wrong consumers, dismissed and expunged records, and misdemeanors reported as felony convictions. These inaccuracies can result in the denial of employment, missed economic opportunity, and reputational harm to otherwise qualified applicants.
The agency also found that the companies unlawfully included certain information in consumer reports they provided to prospective employers. Specifically, the CFPB found that GIS and BCG failed to take measures to prevent non-reportable civil suit and civil judgment information older than seven years from being illegally included in its reports.
GIS and its affiliate, BGC, collectively generate and sell more than 10 million consumer reports about job applicants each year to prospective employers. These consumer reports include criminal history information and civil records, among other types of data. Employers use the consumer reports to determine hiring eligibility of applicants and make other types of employment decisions. The companies are two of the largest background screening report providers in the United States.