Nation’s Biggest Employment Background Screeners Must Pay $13M Over Inaccurate Reports

Before offering a prospective employee a job, many companies will first perform a background check. As with credit reports, any inaccuracies in these transcripts can affect an applicant’s eligibility for employment. To that end, federal regulators have ordered two of the country’s largest employment background screening report providers to pay $13 million in penalties and refunds for providing inaccurate information. 

The Consumer Financial PRotection Bureau announced that General Information Services (GIS) and its affiliate, e-Background-checks.com, Inc. (BGC), will provide $10.5 million in relief to consumers who were negatively affected by the companies’ erroneous reporting.

Employers routinely use these background reports – which include criminal history information and civil records – to determine hiring eligibility of applicants and make other types of employment decisions

According to the CFPB consent order [PDF], GIS and BGC – which collectively generate and sell more than 10 million reports about job applicants each year – failed to employ reasonable procedures to ensure the accuracy of the information contained in reports provided to potential employers.

The CFPB found that GIS did not require employers to provide consumers’ middle names, and neither company had a written policy for researching applicants with common names.

As a result, the companies provided prospective employers with inaccurate reports that included criminal records attached to the wrong individuals, dismissed and expunged records, and misdemeanors reported as felony convictions.

In fact, the CFPB found that between 2010 and 2014, nearly 70% of criminal history disputes filed with GIS resulted in some change or correction to the information in the consumer’s background report.

Additionally, the Bureau found that GIS and BGC 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.

The CFPB claims that GIS and BGC’s actions likely resulted in the denial of employment, missed economic opportunity, and reputational harm to otherwise qualified applicants.

Under the Bureau’s consent order, the two companies must pay $10.5 million in relief to harmed consumers.

The companies must identify individuals who were negatively affected by their conduct and provide approximately $1,000 to each.

GIS and BCG are also required to pay a $2.5 million civil penalty, revise their compliance procedures, retain an independent consultant, and develop a comprehensive audit program.