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Inside Privacy Updates on Developments in Global Privacy & Data Security from Covington & Burling LLP

FTC Obtains Second Largest Civil Penalty Under FCRA

Posted in Federal Trade Commission, Financial Institutions, Financial Privacy, United States

An employment background screening company will pay a $2.6 million civil penalty to settle Federal Trade Commission charges under the Fair Credit Reporting Act.   The FTC alleged that HireRight Solutions, Inc., which compiles background reports to assist employers in making hiring and other employment-related decisions, is a consumer reporting agency since its reports “bear on . . . consumers’ general reputation and personal characteristics; and are used as a factor in determining eligibility for employment.”  The FTC charged that, as a consumer reporting agency, HireRight had an obligation to follow reasonable procedures to assure the maximum possible accuracy of the information in its consumer reports — an obligation that the FTC says HireRight violated.

In addition to a $2.6 million civil penalty, the consent decree enjoins HireRight from failing to follow reasonable procedures to:

  • Ensure that its consumer reports reflect the current status of criminal records that have been expunged;
  • Prevent the inclusion of multiple entries for a single criminal offense; and
  • Prevent the inclusion of information about individuals other than the person about whom a consumer report pertains. 

The consent decree also enjoins HireRight from failing to provide consumers full access to records maintained about them or failing to investigate or respond promptly to consumer disputes about the accuracy of HireRights’ consumer reports.   

According to press reports, this is the second largest civil penalty that the FTC has obtained under the FCRA.  In 2006, ChoicePoint, Inc. agreed to pay $10 million to settle claims under the FCRA.