Duplicated and stale criminal activity in background report sufficient to allege willful FCRA claim
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Thursday, January 14, 2016

Duplicated and stale criminal activity in background report sufficient to allege willful FCRA claim

By Kathleen Kapusta, J.D. A consumer reporting agency that provided a prospective employer with a background check on an applicant that purportedly contained duplicate entries of his prior criminal activities, as well as criminal record information on multiple cases that did not result in a conviction, failed to convince a federal district court in California to dismiss the applicant’s putative class action alleging violations of the Fair Credit Reporting Act. Not only did he adequately allege the company failed to maintain strict procedures to ensure only complete and up-to-date information was reported, he adequately alleged that its violations and procedures were objectively unreasonable and reckless, and thus willful (Hawkins v. S2Verify LLC, January 11, 2016, Alsup, W.). The applicant, a former drug addict who had committed various petty crimes to support his drug habit, claimed he had been clean and sober for a number of years when he applied for a security guard position with IPC Corporation. IPC obtained a consumer report of the applicant from the defendant that allegedly contained numerous inaccuracies as well as information that the FRCA mandates be excluded and purportedly relied on that report to deny his application. The applicant then sued the consumer reporting agency, asserting on behalf of a putative class that it failed to “use reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates,” failed to use “strict procedures” to ensure that the public-record information reported was complete and up to date, and acted willfully. Reasonable procedures. The employee adequately pleaded violations of Section 1681e(b), which requires a credit reporting agency to “follow reasonable procedures to assure maximum possible accuracy.” Not only did he allege that the defendant “routinely sells consumer reports based on information contained in its criminal history databases without sufficient procedures to ensure that the reported information complies with the FCRA,” the complaint described the insufficient procedures in detail by asserting that the defendant improperly aggregated criminal history information without conducting individualized verifications to determine accuracy, used an inaccurate system that caused unreadable, repetitive, erroneous, and incomplete criminal history information, and failed to use a proper computer algorithm to ensure stale information was not reported. Notification. He also specifically alleged that he only received notice that adverse information had been reported about him after IPC had already made the decision not to hire him. On its face, this was a violation of Section 1681k(a), which requires that the consumer be notified “at the time such public record information is reported to the user of such consumer report.” Further, he adequately alleged that the defendant failed to maintain strict procedures to ensure only complete and up to date information was reported. Disagreeing with the defendant’s contention that its inclusion of several duplicates of the same criminal activity on the applicant’s report was not inaccurate under these FCRA sections, the court found it plausible that the inclusion of the same criminal activity multiple times in a report could be misleading in a way that adversely affected IPC’s decision regarding his employment. Willfulness. Finally, the court found that the applicant adequately alleged the defendant acted willfully in violating the FCRA under Section 1681n. The complaint stated that the defendant “was well aware that it was subject to the mandates and requirements of the FCRA and knew or should have known about its legal obligations under” the Act that it “was at least reckless in failing to make an appropriate and effective effort to ascertain the FCRA provisions governing its conduct and implement procedures designed to comply with the FCRA’s mandates.” Rejecting the company’s argument that the duplicate reporting of criminal activity and the inclusion of old and stale charges and convictions did not rise to the level of being objectively unreasonable, the court pointed out that in the overwhelming majority of FCRA cases, the reasonableness of the procedures and whether the agency followed them will be jury questions. Thus, said the court, the applicant sufficiently pleaded that the company’s violations and procedures were objectively unreasonable, reckless, and thus willful.

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