United States: CFPB Imposes $13 Million FCRA Consent Order On Large Consumer Reporting Agencies Due To Employment Background Check Practices

On October 29, 2015, the Consumer Financial Protection Bureau ("CFPB") announced the settlement of an enforcement action against two affiliated consumer reporting agencies under the Fair Credit Reporting Act ("FCRA") based on these companies' employment background screening practices. The consent order requires these background screeners to pay a total of $13 million in penalties and consumer redress. The Order also requires significant changes in the companies' practices with regard to matching and use of public record information. This enforcement action provides another example of the CFPB flexing its regulatory muscle in the FCRA arena. All consumer reporting agencies ("CRAs"), all businesses that furnish data to a CRA ("furnishers"), and all users of data obtained from a CRA ("users") should be concerned about the CFPB's use of its enforcement authority.

The targets of the CFPB's enforcement action were General Information Services, Inc. and e-Backgroundchecks.com, Inc. (the "Respondents"). The Respondents provide public record background information – such as criminal records and civil judgment data – to employers who are conducting screenings on job applicants and current employees.

In the enforcement action, the CFPB claimed the Respondents failed to employ reasonable procedures to assure "maximum possible accuracy" of the data provided to employers, as required by the FCRA. One main thrust of the Order, for example, focused on the procedures used by Respondents to "match" a criminal record to a given individual.

The Order seemed to take exception with the "strict procedure" practices of Respondents' employees when deciding whether a record related to a consumer in the employment screening context. Under Section 613 of the FCRA, consumer reporting agencies under certain circumstances are required to use "strict procedures" to ensure that public records reported for employment purposes are complete and up to date. The Order, however, does not only address "strict procedures." It also addresses the broader standard of "reasonable procedures" generally applicable to almost all information reported by a consumer reporting agency for any permissible purpose.

Critics believe that the Order continues the CFPB's expansive efforts to legislate through consent decrees by attempting to press its aggressive interpretation of federal consumer protection laws – often far beyond what the plain language of the respective statutes and courts have imposed. For instance, the CFPB appears to conclude that matching should be done by requiring an exact match based on first, middle and last name, plus one additional identifier such as date of birth or Social Security number. By this Order, therefore, the CFPB in effect is attempting to create a detailed standard of conduct in matching data – but one which likely does not recognize the realities of the market. For example, very few if any courts provide a social security number of the defendant, making a match on this element impossible for some criminal records. Likewise, it is not uncommon for courts to record the middle name as the first name or to carry forward an error either intentionally introduced by the defendant (for example to avoid a warrant) or through key stroke errors by the court personnel. Indeed, there is substantial evidence that persons with criminal records frequently supply alternate names to defeat background checks. Thus, it would be dangerous to conclude that this Order should create an industry wide standard; using the CFPB's view could allow someone with a serious criminal conviction to avoid detection and gain employment in a highly sensitive place of employment, such as a daycare or senior living facility.

Another main thrust of the Order focused on the Respondents' internal compliance procedures. The Order claims they failed to have written procedures for researching public record information for consumers with common names, failed to analyze consumer dispute data to determine data integrity issues and identify potential reporting weaknesses, and failed to conduct regular meetings to discuss errors. The Order requires Respondents to correct all of these claimed deficiencies. Again, by this Order, the CFPB seeks to establish a detailed standard for internal compliance procedures down to the level of detail of how often internal meetings should occur to discuss consumer complaints (monthly).

Because the Respondents were unable to discern from the FCRA a requirement to use first, last, and middle names in matching, and the necessity of monthly meetings, the CFPB imposed significant monetary and non-monetary penalties. The Order requires the Respondents to establish a $10.5 million fund dedicated to payments to the consumers at issue. The Order also imposes a total of $2.5 million in civil money penalties, payable to the CFPB directly.

While the specifics of the Order are of particular concern to CRAs, the broader lesson of the Order is that the CFPB is asserting enforcement power under the FCRA that not only includes CRAs, but also any other businesses regulated by the FCRA, including furnishers and users. In the Order, the CFPB specifically cites its authority to enforce the FCRA against "persons subject to the FCRA." The phrase "persons subject to the FCRA" draws upon a provision of the FCRA that gives the CFPB enforcement authority over "any person" subject to the FCRA. The FCRA regulates not only CRAs, but also the conduct of many businesses that supply information to CRAs and most businesses that use data obtained from CRAs. Hence, the Order teaches that if your business is involved in FCRA-regulated activities, then the CFPB is interested in you. Moreover, the CFPB may not provide any guidance on an issue before an enforcement action is pursued. From a compliance perspective, businesses must look ahead to what issues will become important to the CFPB, which may not always be obvious to those not actively involved in the FCRA.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

David N. Anthony
Timothy St. George
Keith J. Barnett
Alan D. Wingfield
In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.