CFPB Penalizes Two Background Screening Report Providers Because They Penalized James Smith #12,049

In late October, the Consumer Financial Protection Bureau (CFPB) penalized two of the largest employment background screening report providers. The two companies penalized were General Information Services (GIS) and, Inc. (BGC). The penalties incurred included a $10.5 million in relief money to be paid to customers, a $2.5 million civil penalty, mandatory procedure and policy changes, and the hiring of an independent auditor to ensure future compliance.

One failure unearthed during the CFPB’s review was that there wasn’t a sufficient audit process to check that all reports were accurate. Between 2010 and 2014, nearly 70% of all criminal history disputes for these companies resulted in some sort of change because of an inaccuracy found on the report. These inaccuracies included mismatched criminal records, dismissed or expunged records, and misdemeanors reported as felonies.

The CFPB also found that neither GIS nor BGC adequately prevented non-reportable suits and judgments (such as information older that the reportable age) from being illegally included in reports. Additionally, the companies were found guilty of failing to make sure that the public records matched the correct customer. These mismatched records resulted in rejected employment for the customer. One common example of failure to make sure records matched is that GIS did not require employers to provide middle names for potential employees. This is especially problematic with common names.

Let’s get more concrete with this “common name” problem. According to information compiled by in 2013, there were 38,313 James Smiths living in the United States. Consider that for a moment. Assuming that the age range of these people is between 18 and 90 (people who have phones in their name), that gives us 72 years—or 26,280 days. That means that about every other day, there is more than one person christened James Smith with the exact same name and date of birth. And the concentration of people named James Smith will likely be greater the younger they are because there are more 18 year-olds than 89 year-olds. Without a middle name, you can see how it might be difficult to determine who’s who, especially with people who are of employment-seeking age. This is why it was such a problem when the CFPB found that the companies did not have a written policy about researching common names to ensure that the record provided indeed matched the correct customer.

Employers, job-seekers, and background screening providers need to take care that all information provided on a background screening is accurate and complete. Accurate and complete input with ensure the correct output, which is good for everyone involved.

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