Cleveland Based Consumer Reporting Agency Offers Innovation to Help Employers Avoid FCRA Lawsuits

Knowing that so many good companies are being sued using loopholes in the FCRA, Pre-Check had to devise a truly unique solution. - Robert Drusendahl

According to a Lexis® database search, lawyers and pro se plaintiffs filed 4,080 Fair Credit Reporting Act (“FCRA”) cases between August 2016 and August 2017. These can be extremely costly for employers to defend, in part because the FCRA permits statutory damages and attorneys’ fees, even when there has been no real injury to anyone. As these lawsuits proliferate, The Pre-Check Company, a Cleveland-based Human Resource consultancy, is testing an innovative solution to protect employers.

In basic terms, the FCRA creates liability for employers and third-party background search firms - known as Consumer Reporting Agencies - if a number of particular requirements are not met when employment background searches take place through a third-party search firm. However, if the employer were to perform its own background checks on applicants, the FCRA does not create liability. What Pre-Check has developed is a “best of both worlds” solution that provides employers with a toolkit for doing complete and accurate background check with the same quality that a third-party firm would provide, but using its own employees. This solution is known as “Pre-Verify” and will be available in early 2018.

Employers caught between the need to conduct proper vetting of prospective employees to avoid workplace violence and other serious on the one hand, and the prospect of “gotcha” FCRA litigation on the other, now have an option. The importance of taking proactive steps is highlighted by the continuing saga of the Spokeo litigation. Spokeo is a website with a “people search engine” that organizes various types of public information and makes it available to those who use the site. Many employers use it for vetting candidates. A Thomas Robins sued Spokeo for allegedly providing inaccurate data. The 9th U.S. Circuit Court of Appeals initially found that he had stated an FCRA based claim. On appeal, the U.S. Supreme Court found that there must be a concrete injury to create standing for federal court jurisdiction. On remand, The 9th Circuit Court of Appeals concluded that the privacy interests allegedly injured by the false information were sufficiently concrete to confer standing, allowing the case to proceed.

Many employers use when conducting pre-employment research on candidates – either directly or through a Consumer Reporting Agency (CRA). With 4,080 FCRA based filings in 2017 alone, the Spokeo II decision promises to serve as traction in this upward trend – up nearly 50 percent in January 2017 and still climbing.

The Milwaukee Journal Sentinel last year highlighted how one serial plaintiff, Cory Groshek, has managed to extract over $200,000 in legal settlements from employer by applying to 562 jobs and litigating every FCRA violation he could pinpoint. Currently, in a battle with Time Warner Cable, Gorsech openly boasts about his successes. Similar lawsuits have snagged large corporations like UPS, Disneyland, Discover Bank, Equifax, Experian, and TransUnion with ongoing lawsuits and some settlements landing above $3 million.

Putting all this together, employers who want to do their hiring legally, fairly and with minimal risk now have an alternative to relying on third-party CRAs. “Helping You Hire the Best” has been a guiding mission for The Pre-Check Company since Robert (Bob) Drusendahl, president of The Pre-Check Company, incorporated the organization in 1992. The issue of serial plaintiffs and FCRA-focused law firms using the FCRA to win money in large class action suits became apparent to Drusendahl at a meeting of the National Association for Professional Background Screeners (NAPBS) of which Pre-Check is a founding member.

“Knowing that so many [hunderds] of good companies are being sued using loopholes in the FCRA, Pre-Check had to devise a truly unique solution,” said Drusendahl. “The FCRA allows for employer to do their background checks, thus they are exempted from the obligations in this law [FCRA]. In the age of outsourcing, we need to make it easy for employer to bring this process back in-house! The risks have become too high.” Not only does in-house background checking avoid FCRA issues, but it also enables employers to control Personally Identifiable Information (“PII”) more effectively. “This [PII control] means fewer opportunities for data breaches, so the [employers] can ensure the security of applicants’ PII – another point in the FCRA. Nobody wants their identity stolen,” said Drusendahl.

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Robert (Bob) Drusendahl
Chief Executive Officer
The Pre-Check Company

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