Banking and Finance Law Daily Background screener settles FCRA claims with CFPB for $8.5M
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Friday, November 22, 2019

Background screener settles FCRA claims with CFPB for $8.5M

By J. Preston Carter, J.D., LL.M.

The Bureau alleged that Sterling Infosystems’ procedures created a heightened risk that its consumer reports would include criminal records belonging to another individual with the same name as the applicant.

The Consumer Financial Protection Bureau announced that it has reached a proposed settlement with Sterling Infosystems, Inc., to resolve allegations that the company violated the Fair Credit Reporting Act by failing to employ reasonable procedures to ensure the maximum possible accuracy of the information it included in the consumer reports it prepared. The stipulated judgment requires Sterling to pay $6 million in monetary relief to consumers and a $2.5 million civil money penalty, and it prevents the company from engaging in the allegedly illegal conduct again. Sterling is a privately-held Delaware corporation headquartered in New York whose primary business is to prepare background screening reports on individual job applicants to assist employers in employment-making decisions.

The CFPB’s complaint, filed in the U.S. District Court for the Southern District of New York, alleges that Sterling’s procedures created a heightened risk that its consumer reports would include criminal records belonging to another individual with the same name as the applicant. The Bureau alleges that Sterling had a practice of including "high-risk indicators" in its reports without taking any steps to verify the accuracy of them. These "high risk indicators," which Sterling obtained from a third party, characterized addresses that the consumer may have lived at as "high risk."

The Bureau also claims that Sterling violated the FCRA by failing to maintain strict procedures to ensure that public record information that it included in the consumer reports was complete and up to date or notify consumers, at the time that such information was reported, of the fact that public record information was being reported. Finally, the Bureau claims that Sterling violated the FCRA by reporting criminal history information and other adverse information about consumers outside of the allowable reporting period.

Companies: Sterling Infosystems, Inc.

MainStory: TopStory CFPB ConsumerCredit EnforcementActions FairCreditReporting NewYorkNews

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