Written by ESR News Blog Editor Thomas Ahearn
On February 16, 2021, a federal judge in California upheld a nearly $ 175,000 settlement in a class action lawsuit alleging a violation of the “standalone” disclosure requirement of the Fair Credit Reporting Act (FCRA) that an individual requires who wish to obtain a consumer report for employment purposes to allow applicants to have “clear and prominent disclosure … in a document that consists of disclosure only”.
FCRA 15 USC § 1681 was enacted by Congress in 1970 to promote the accuracy, fairness, and privacy of consumer information contained on Consumer Reporting Agencies (CRAs) files. The FCRA also protects consumers from willful and / or negligent inclusion of inaccurate information in their consumer reports and regulates the collection, dissemination and use of consumer information, including consumer credit information.
In the Taafua v. Quantum Global Technologies (No. 18-cv-06602-VKD) case, Plaintiff Paniani Taafua was hired by Defendant Quantum Global Technologies, LLC (QGT), which required each applicant to sign a disclosure form authorizing QGT Get a consumer report from a third party background screening provider. However, in addition to disclosing the consumer report, the form also included a disclaimer.
The plaintiff alleged that the inclusion of the disclaimer was against the FCRA and that he was “confused and misunderstood by the standard disclosure authorization form [QGT] would request a consumer report as defined in the FCRA. “The plaintiff filed the lawsuit on behalf of himself and over 1,000 other applicants. The parties agreed on a settlement for a total of $ 174,980, which was approved by US Judge Virginia K. DeMarchi.
Class action lawsuits for alleged violations of the FCRA have become all too common and can result in cash prizes of thousands and even millions of dollars. In 2020 alone, FCRA class action lawsuits were settled for $ 4.75 million, $ 4.25 million, $ 1.28 million, $ 500,000, $ 220,000, and $ 120,000. In addition, a $ 18 million settlement was proposed and an appeals court cut “excessive” damages of $ 60 million.
In January 2021, the Consumer Financial Protection Bureau (CFPB) – the government agency that enforces the FCRA – published a “Task Force on the Federal Report on Consumer Financial Law” (Volume I and Volume II), which contained recommendations for improving consumer protection in the EU financial market including recommending that Congress amend the FCRA to appropriately limit cash prizes in FCRA class action lawsuits.
It states: “Without adequate upper limits, claims for damages can lead to legal disputes between companies that are disproportionate to consumer damage. The FCRA sets statutory damages for willful breach of any provision of the law of at least $ 100 or more than $ 1,000, in addition to unlimited punitive damages plus legal fees and attorney’s fees. The task force is not clear why Congress left off a class action damage cap in the FCRA. “
The CFPB report continued, “Since the FCRA was among the first consumer finance laws passed by Congress, no clear precedent had yet been set for limiting class action damages … Whatever the reason for the original lack of a class bonus cap was, the task force I see no reason to expose credit rating agencies, consumer report users, employers, dealers and other businesses to unlimited potential liability. “
FCRA lawsuits will continue to serve as a guide to compliance for employers who conduct background checks on applicants, according to the world’s leading background screening provider, Employment Screening Resources® (ESR), which hosts the 14th annual “ESR Top Ten Background Check Trends” for 2021. Since 2008, ESR has annually selected the top emerging and influential trends in the background screening industry.
Employment Screening Resources® (ESR) – ranked number one screening company by HRO Today in 2020 – offers two free whitepapers on the topics “Common Ways Consumer Reporting Agencies are sued under the FCRA” and “Common Ways Prospective or Current Employees Sue Employers As part of the FCRA “to help rating agencies and employers comply with the FCRA. Further information on ISR can be found at www.esrcheck.com.
NOTE: Employment Screening Resources® (ESR) does not provide or provide legal services or legal advice of any kind or nature. All information on this website is for educational purposes only.
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