FTC Says When Conducting Background Checks, Don’t Double-Dip!

On February 16th, the FTC published a blog post about the importance of organizations using consumer reports in compliance with the Fair Credit Reporting Act (FCRA). According to the FTC, it is important that organizations only use consumer reports for the purpose for which they originally obtained them and to refrain from using them for secondary reasons.

When conducting a background check on an applicant or employee, you must certify to the consumer reporting agency (background screening vendor) the purpose for which you will use it. You must then use the report only for that purpose. As an example, if you obtain a report for employment purposes, you cannot also use it to make a credit decision.

According to the FTC, the three important principles for users of consumer reports to keep in mind are:

  • If an employer makes a negative decision on a person based on a consumer report, it is important to notify the person with an adverse action notice;
  • The adverse action notice may be provided orally, electronically, or in writing; and
  • Employers must securely dispose of the consumer report when finished.



Judge Rules Amazon Can’t Duck Class Action Background Check Suit

  On January 30th, A Florida federal judge denied Amazon.com’s motion to dismiss a class action by job applicants accusing the online retailer of violating the Fair Credit Reporting Act through its background check process.

Plaintiffs argued that Amazon violated the FCRA by failing to provide two separate forms for the job application and the background check authorization for employment at a Florida-based fulfillment center. It should be noted that this case is a consolidation of two separate background check litigation suits.

U.S. District Judge Lazzara agreed with the plaintiffs that the alleged failure to receive a stand-alone disclosure document is not hypothetical or uncertain, and can plausibly constitute an injury of fact. The judge found that Amazon’s actions related to the disclosure violations were willful, as a liability waiver was included with the background check policy.  He stated, “The plaintiffs have at least three kinds of harm: invasion of privacy, informational harm and risk of harm.” He added that it is possible the company did not follow the proper steps to receive approval for the checks. All of this convinced the judge that Article III standing is sufficiently established in this case.

The judge disagreed with arguments by Amazon that the applicants had no viable claim based on the Supreme Court’s decision in Spokeo v. Robins, which found that consumers must allege concrete injury instead of a technical statutory violation to establish standing.

Simply put, Plaintiffs sued alleging their background checks were unauthorized because the authorizations did not comply with the FCRA.

There’s an important lesson for employers here. Ensure your hiring process is FCRA compliant! The FCRA expressly requires employers to provide applicants with a stand-alone disclosure and authorization form prior to obtaining a background check. Unfortunately, many employers still fail to comply with this law and find themselves embroiled in costly lawsuits. This lawsuit is a reminder that employers should periodically review their hiring processes to ensure strict compliance.

To learn more about FCRA compliance, call a Cisive Specialist at 866-5575984 or click here.

Hargrett v. Amazon.com Inc.

Express Services Settles Background Check Class Action for $5.7M

Plaintiff Jose Flores sued Express Services alleging that they violated pre-adverse action notice to employees and job applicants, as required by the FCRA, by not affording them the opportunity to correct any inaccuracies in background checks before Express took adverse action against them. Defendants deny that their actions violated the law.

Mr. Flores and Express Services agreed to settle the claims alleged in the case to avoid the cost and risk of trial.

The Settlement Agreement provides the following benefits:

  • Defendants have changed practices to address the conduct complained of in the litigation.
  • Defendants will pay the sum of $5,750,000.00 into a Settlement Fund.

Important lesson to employers: Over the last few years, federal courts have increased scrutiny of employer compliance with the FCRA’s adverse action requirements. Employers must follow the requirements if they intend to take adverse action against a job applicant or employee BEFORE the adverse action is taken.

Simply put, if you intend to deny employment based upon the results of a background check, you must provide a pre-adverse action notice to the individual, including a copy of the consumer report. This action gives the applicant or employee an opportunity to correct any mistakes in the report and discuss it with you before the company takes adverse action. Failure to do so – now more than ever – will most likely result in a lawsuit you cannot win.

To learn more on FCRA compliance click here or contact a CARCO Specialist at 866-557-5884.


Starbucks Hit With Class Action for Violating the FCRA Relating to a Background Check

starbucks-logo-051711Jonathan Rosario claims that Starbucks Corp. denied him a job based on inaccurate results of a background check, without giving him a proper chance to correct those results. In doing so, he claims, Starbucks violated provisions of the FCRA.

In March 2016, Rosario applied for a job at Starbucks in Castle Rock, CO. The background check performed on him listed criminal felony and misdemeanor records from counties in Pennsylvania, some of which involved violent crime and drug-related charges.

Rosario claims that by the time he received the letter from Starbucks informing him that the results of his background check did not meet the company’s requirements, Starbucks had already removed him from consideration for employment.

Rosario says the criminal history that showed up in his Starbucks background check is inaccurate and false. He believes those entries resulted from identity theft, especially since he has never been to Pennsylvania.

Rosario challenged the inaccurate background check by following the dispute procedure of the consumer reporting agency that performed the background check for Starbucks. The errors were corrected, and a representative confirmed to Rosario that a corrected report had been forwarded to Starbucks.

Rosario then contacted Starbucks in an attempt to revive his job application, he says. However, the company declined to revisit its decision to deny him a job.

The law requires that before an adverse decision is made, the job applicant must get a copy of the report and be given a chance to dispute and correct its contents. By failing to give Rosario a meaningful opportunity to dispute the contents of his Starbucks background check, he claims, Starbucks violated the pre-adverse action notification requirements in the FCRA.

Rosario proposes to represent a nationwide plaintiff Class that would include U.S. persons who applied for a job at Starbucks and who were the subject of a Starbucks background check report on which the company based an adverse employment decision, but who did not receive a timely copy of that report or the FCRA summary of rights.

He seeks an award of actual, statutory and punitive damages for himself and the plaintiff Class and reimbursement of court costs and attorneys’ fees, all with pre- and post-judgment interest.

There is an interesting lesson for employers here: Employers may want to revisit their policies regarding keeping a job open while the selected candidate is disputing a background report. The FCRA does not require that jobs be kept open during a dispute. No one can predict what a judge or jury might decide, but either way it will be extremely costly for Starbucks to defend their actions. If this case is decided in plaintiff’s favor, employers will certainly want to revisit their dispute waiting policy.

CARCO can help keep you FCRA compliant. CARCO’s onboarding platform allows clients to be notified if a dispute has been opened based on the clients’ work flow and their decision on whether or not to keep the job open during the dispute.

Contact a CARCO Specialist at 1-866-557-5984 or click here for information on how CARCO’s onboarding platform can keep your company FCRA compliant!


Jonathan Rosario v. Starbucks Corp., Case No. 2:16-cv-01951, in the U.S. District Court for the Western District of Washington.

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.

Dish Network to pay $1.75M to settle class action for FCRA violations

dish_logo  On September 7th, Dish Network, LLC agreed to a $1.75 million settlement resolving allegations that the company violated the FCRA.

The Plaintiffs accused the company of soliciting background reports on technicians, hired as contractors, without providing disclosure forms. The Plaintiffs also accused the company of prohibiting “high-risk” technicians from working on certain Dish projects, without allowing technicians the opportunity to verify or correct information included in their background check reports.

The settlement will offer $480 to the 9,000 contractors that Dish labeled “high-risk” and offer $80 to the 38,000 contractors that Dish failed to provide disclosures to. The complaint accused Dish of being aware of its FCRA obligations but intentionally choosing to ignore disclosure requirements.

The suit was originally filed in 2012 and included Sterling Infosystems Inc., the background screening vendor that provided the reports.  Sterling paid $4.75 million in November 2015 to settle the claims against it.


Ernst v. Dish Network LLC et al., case number 1:12-cv-08794, in the U.S. District Court for the Southern District of New York

Compliance: The Real ROI of Background Screening

Compliance circleBusinesses worldwide have seen the need for pre-employment background screening and are now doing these searches as a routine part of their hiring process. However, shutting the door on potentially harmful employees has now opened the door to a new realm of litigation and court battles.

With a revolving door of compliance lawsuits that seems to just keep on spinning, it is more important than ever to make sure that before a background screening provider vets your potential employees, you must first vet the market for the right provider who adheres to responsible hiring practices recommended by the EEOC and follows the guidelines of the FCRA.

Partnering with a background screening company is an investment to insure your business against the economic disturbances caused by poor hiring decisions. With any investment, you expect to see a return benefit, but what many companies are seeing instead is the inside of a courtroom. So what is the root cause of screening partnerships costing your business potentially millions in damages? One word: noncompliance.

Noncompliance to the strict rules and regulations of the background screening industry can really cost your business. Your time and money are too important to waste being bogged down in the mire of expensive litigation, so it is critical to find the right provider who will actually save you money, not exhaust you of it. The potential harm of having the wrong provider is seen all throughout the industry today. Grocery store chain Whole Foods has settled a class action lawsuit for about $800,000 after not properly informing applicants that they would be undergoing background investigations. Home Depot recently settled a class action lawsuit for $1.8 million for violating the FCRA by not having proper background check forms for the applicants. One of the top banking and financial companies is fighting a $12 million lawsuit for an FCRA violation caused by a noncompliant background investigation which violated pre-adverse action notifications. As you can see from only a few examples, should your business find itself on the wrong end of one of these kinds of lawsuits, your ROI is going to take a serious blow.

You can get a glimpse into the kind of quality that a background screening provider will give you if you take a look at the lawsuits that they themselves are fighting. One of the “top” background screening providers is fighting a $4.75 million dollar lawsuit for an FCRA violation in which they reported outdated information on an applicant which resulted in a loss of employment. This same provider is defending another class action suit when they reportedly failed to provide applicants with consumer reports prior to taking adverse action. Two other major credit reporting agencies have recently been named in a lawsuit in which they violated the FCRA by listing inaccurate data. Other major players in the industry are facing lawsuits for a number of noncompliance issues such as failing to reinvestigate a disputed report, illegally reporting race, and failing to provide notices that help applicants correct mistakes.

When it comes to background screening, ‘cheaper’ or ‘bigger’ does not mean ‘better.’ Unfortunately this fallacy has cost many businesses millions of dollars. While a low price tag is appealing, the allure is gone once inevitable litigation rears its costly head and you are left to pay for the damages.

Many background screening providers have the rhetoric of being compliant, but few have the record of being compliant. The top three consumer reporting agencies are currently defending over 200 separate lawsuits and regulatory complaints. That is not the kind of stability and trust you want from a business partner, especially since the whole reason you pay for pre-employment screening is to protect your company from these kinds of situations.

A trusted partner should not treat their services as a caveat emptor. In order to have peace of mind, a provider should have confidence in meeting all compliance requirements by providing client indemnification for any non-compliant processes in your contracts. When choosing a provider, look for a CRA who has never had a complaint filed against it with the Federal Trade Commission (FTC), the Consumer Financial Protection Bureau (CFPB), or any other state/federal regulatory agency. The best protection for your company would come from a CRA who has an unblemished history for never having a judgment against it in connection with the performance of a background investigation and never had a Class Action lawsuit—something that has become commonplace in the screening industry.

Compliance can be ensured in a number of ways, one of which is finding a provider who is accredited by the NAPBS, adhering to specific requirements governing business processes and controls specific to the background screening industry. NAPBS accreditation requires an independent audit with demonstrated compliance against program standards relating to legal compliance, consumer protection, quality and accuracy, and more. Accreditation ensures that a company’s background screening services are completed with the highest level of compliance and accuracy, using industry best practices. Not surprisingly, only a small percentage of all employment screening companies are accredited by NAPBS.

CARCO is one such company who meets all of these requirements, making us the right investment for any business.  CARCO is one of a select group of background screening companies that has received NAPBS accreditation and puts compliance at the forefront of every screen we do, which in turn protects your business from any needless litigation. The ‘return on investment’ that top competitors provide instead ends up being a ‘return to court’ for you and your company. When other CRAs claim to be compliant to lawful regulations, history shows they instead are defiant. With CARCO as your partner we make sure that threats are mitigated, not accentuated.

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.

Is Your Hiring Process Completely FCRA Compliant?

GavelIf not, your company could quickly be in the same situation as a large trucking conglomerate, which was recently ordered to pay $4.4million to settle a class action suit claiming that it failed to disclose to more than 10,000 job applicants that they can access their consumer reports for free and contest background checks used in the hiring process.


The lead plaintiff also alleged that the trucking company conducted a background report on him without proper authorization and that he did not get the job as a result of that report.  The complaint does not disclose the information included in the criminal background check, nor whether it was accurate. It does, however, allege that the company’s decision not to hire him was based on the report without informing him of the reason, which is in violation of the FCRA


The trucking company has since updated its hiring disclosures. Applicants now receive a notice with information on the consumer reporting agency used for background checks and they must sign a statement authorizing the background check.


If you haven’t done so already, now is the time to review your hiring process to ensure compliance with the FCRA.  Failure to do so could cause your company to be embroiled in a similar class action suit which is costly in terms of the settlement and the ramifications to your company’s reputation.


In light of the recent volume of FCRA cases relating to background checks used in the hiring process, the Equal Employment Opportunity Commission and the Federal Trade Commission co-published a new guidance consolidating the two agencies’ rules on such checks.  Visit www.carcogroup.com to view the guidance.

Whole Foods Hit With a Class Action Suit Over Background Checks

A lawsuit was filed on February 7, 2014, by the U.S. District Court in Oakland, California, against Whole Foods Market for violating the FCRA by using an invalid authorization form to get permission from applicants to perform a background check in the hiring process.  The lawsuit charges that the Whole Foods FCRA authorization form contained language releasing those who obtain or provide consumer reports from all liability.  This is in direct violation of the FCRA’s requirement that the authorization form should only contain the required disclosures and the requested authorization. (The other requirement by the FCRA is that the authorization form must be executed and signed by the applicant prior to conducting a background check.)


In addition to the release of liability verbiage, the form contained other extraneous verbiage, including an acknowledgement that the application for employment does not create an employment contract, a statement that the applicant waives the receipt of a copy of any public record, and an admission that the applicant has not knowingly withheld any information.


The lawsuit purportedly involves thousands of individuals and seeks damages of up to $1,000 for each individual from whom Whole Foods obtained a consumer report without valid authorization, plus punitive damages and costs. The invalid authorization form has been used by Whole Foods since 2009.


Employers, in order to avoid a costly lawsuit, make sure you are compliant. If you have not already done so, it’s time to review your hiring process and documentation with your legal counsel to ensure compliance with the Fair Credit Reporting Act (and don’t forget the EEOC Guidelines).


Also, check with your employment screening provider about solutions to stay compliant.