Blog by Danny Davila, Director of FCRA Regulatory Risk and Consumer Compliance Advisor at GroupOne Background Screening

Danny Davila will be a guest expert next Thursday, June 3 during GroupOne’s webinar “Building a Strong Background Screening Program.”

The Professional Screening Background Association (PBSA) held its Mid-Year Conference on April 19-20, 2021. This year’s conference was held virtually, to include networking, presentations and demos of new products and services.

The conference’s objective was to provide legal updates from federal, state and local government regulatory agencies. It was also a great opportunity to update ourselves on consumer reporting trends and risk mitigation practices.

Four sessions of interest included: “What’s the Big Deal with Sharing Reports,” “Why You Need a Compliance Manual,” “Matching Beyond the Basics” and “FCRA Master Compliance Program.” Please keep in mind that any content considered by readers should always be reviewed with legal counsel.

“What’s the Big Deal with Sharing Reports”
The standard pre-employment background report contains data obtained from public and private sources ranging from county court records, public databases, employers, education sources and licensure providers. This report, summarized in a three-page document, is used by human resources (HR) to validate and support the decision to hire a new employee. The report is oftentimes shared with other sources. As a healthcare provider, HR reps should be keenly aware of the audits conducted by The Joint Commission, The Centers for Medicare & Medicaid Services and the Texas Department of Health and Human Services where surveyors request copies of the primary source verification on a regular basis.

Reports are also shared with other employers within the same corporate system and if a company contracts with a staffing agency. Please note, data suppliers may have language in their agreements that prohibit the sharing of such information. Please be wary as there are potential issues here. It’s recommended that employers consult with their background reporting company and legal counsel on the sharing of all report information.

“Why You Need a Compliance Manual”
The Fair Credit Reporting Act (FCRA) cites the use of “reasonable procedures” by consumer reporting agencies such as GroupOne as the standard process to ensure data is collected and reported properly. It is critical that agencies include this information in their compliance manual.

Litigation has been successfully brought against consumer reporting agencies because they failed to demonstrate the use of “reasonable procedures.” While the FCRA does not specifically require the procedures in writing, one must ask, “How can you prove you have a procedure if it’s not in writing?” A defendant may claim, “This is how we’ve always done it.” As noted in the presentation, such an explanation will not serve as a legitimate defense. Lesson learned? Always put it in writing!

“Matching Beyond the Basics”
One of the most egregious errors a background reporting company can commit is the false reporting of a criminal conviction against a person who did not commit the crime reported. The Consumer Financial Protection Bureau (CFPB) has stated that a matching name and date of birth alone do not comply with FCRA requirements. In other words, a consumer reporting agency such as GroupOne must have at least three matching variables to confirm the identity before reporting criminal convictions.

Such errors can be costly. In 2020, the court found in favor of the plaintiff in Williams vs. First Advantage LNS Screening Solutions 947, F. 3rd 375, and awarded $250,000 in compensatory damages and $3.3 million in punitive damages. The findings noted the agency provided a criminal report where the person’s name was not validated. The agency also failed to demonstrate sufficient procedures for name matching and even failed to follow its own procedures.

A consumer reporting agency must decide how to define a common name and what statistical model is used to distinguish such names. Do common names vary by geography? It’s a good practice to discuss these definitions with your background reporting agency to ensure the criminal reporting you receive is accurate and defendable.

“FCRA Master Compliance Program”
New state legislation was enacted in Illinois that may serve as a forebearer of U.S. trends. Pre-Adverse and Adverse Action communication will now require the disqualifying conviction and the explanation that the applicant can prmitiovide evidence of inaccuracy or mitigation/rehabilitation. In addition, employers must examine the basis for rejecting a candidate, to include date of conviction, relevancy of the conviction, nature of the conviction and evidence of rehabilitation/mitigation efforts. A major takeaway is the importance of reviewing all FCRA-related forms.

GroupOne is committed to comprehensive risk mitigation practices to ensure our clients receive accurate and reliable background reports. We support all of our clients in their efforts to provide a safe and compliant workforce.