November 16, 2022

In a recent ruling, the Court of Appeals for the Fourth Circuit has found that an online aggregator of public records is not immune from liability under the Fair Credit Reporting Act (FCRA). In addition, the Fourth Circuit found that the liability protections shielding social media platforms from liability for content created by others do not provide the same protection to data brokers, including background check providers.

In this case, the defendant used public data provided by third parties, which allegedly led to inaccurate background checks for employment. In a three-judge panel, the Fourth Circuit found that the Communications Decency Act (Section 230) did not shield the company. This Act protects platforms, such as social media companies, from liability for content created by third parties.

The panel stated that7, though Section 230 shields providers of interactive computer services, “it does not insulate a company from liability for all conduct that happens to be transmitted through the internet.” Because of this, the Fourth Circuit found that the district court made an error in its ruling. Based on the quote above, this law did not shield the defendant from liability for allegations against it.

As a result, the Fourth Circuit revived the class action that accused the company of creating and selling background checks in violation of the accuracy and disclosure requirements of the FCRA. The plaintiffs argue that, though the defendant is an interactive service provider within the criteria for Section 230 immunity, their claims do not treat the company as either a publisher or speaker of the harmful information. Furthermore, they alleged that the defendant themselves provided the information.

Out of the plaintiffs’ four counts of violations under the FCRA, the panel determined that accounts one and three failed to qualify for Section 230 immunity. These counts fell because they do not treat the company as a publisher or speaker. In addition, the company allegedly failed to provide consumers with a copy of their report upon request. Finally, the company did not comply with the FCRA’s requirements for delivering employment-related reports.

Counts two and four alleged that the company failed to implement reasonable procedures to ensure maximum potential accuracy. In addition, the company did not provide accurate and up-to-date reports, which led to the company’s disqualification for Section 230 immunity. According to the appeals court, the plaintiffs alleged enough facts to demonstrate that the company’s actions materially contributed to what made the content inaccurate. 

As a result, the Fourth Circuit found that the lower court incorrectly barred the plaintiffs’ claims, so it remanded the case for further proceedings. As this ongoing case demonstrates, employers must ensure that they partner with a trusted screening provider. The right providers will ensure that companies maintain compliance with the FCRA, federal, and state requirements. This partnership will reduce potential liabilities and provide reliable information for hiring decisions.

Looking to easily verify your employment qualifications? Talk to a sales representative today about switching to pre-employment background checks.

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