Marketing Firm Reaches Settlement in FCRA Class Action

Marketing Firm Reaches Settlement in FCRA Class Action
June 28, 2023

A marketing firm recently reached a settlement agreement with a class of consumers. This firm provides services for insurance companies and faced allegations of violating the Fair Credit Reporting Act (FCRA). According to the settlement, the company must pay $296,400 for using background check reports without first providing applicants with the required FCRA disclosures.

This case began when the named plaintiff brought a class action lawsuit against the company in Florida’s Thirteenth Judicial Circuit Court. According to the plaintiff, the employer willfully failed to provide applicants with pre-adverse action notices. The FCRA requires employers to provide these notices when using a consumer report as the reason for making an adverse action. Before the parties filed for dismissal, the case went to the federal court in the U.S. District Court for the Middle District of Florida. This removal also followed the plaintiff’s subsequently filed complaint.

The FCRA has specific guidelines for using a consumer report, such as background checks, for employment purposes. According to 15 U.S.C. § 1681b(b)(3)(A), “before taking any adverse action based in whole or in part on the report, the person intending to take such adverse action shall provide to the consumer to whom the report relates (i) a copy of the report; and (ii) a description in writing of the rights of the consumer under this subchapter, as prescribed by the Bureau under section 1681g(c)(3) 1 of this title.”

The plaintiff claimed that the employer failed to provide these disclosures. In the suit, the company did not give a copy of the report used to make the decision and the Summary of Rights. When making employment decisions using background checks, the FCRA requires employers to provide these documents within five days of the adverse action. As a result, the employer will pay $296,400 in a settlement fund.

This amount covers attorneys fees, associated costs, and the $4,000 sum to the named plaintiff before distributing the remainder between class members who submitted claims. These class members include individuals who underwent a background check for employment at the marketing firm’s call center. However, the class action would only apply to those who did not receive a copy of the report and a Summary of Rights within five days of adverse action.

This settlement illustrates the importance of complying with the FCRA, especially when performing background checks. The best way to ensure compliance is by partnering with a trustworthy background check company. The right provider will use their experience to deliver accurate and timely reports.

Avoid situations like this by staying updated with the Fair Credit Reporting Act. Read our free guide Adverse Action Notice Protocols in Compliance With FCRA to learn more.