Archive for December, 2012

Merry Christmas!

December 28, 2012 Leave a comment

This blog is on Christmas vacation today, December 28.  It’s still liturgical Christmas!

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Can an FCRA disclosure statement include a release? Probably not.

December 21, 2012 1 comment

Earlier this year, the District of Maryland issued an interesting opinion in Singleton v. Domino’s Pizza, LLC, Civil Action No. DKC 11-1823, 2012 WL 245965 (D. Md. Jan. 25, 2012).  Plaintiff Singleton represented a class of Domino’s employees who had agreed, by signing standard forms supplied by Domino’s, to allow Domino’s to check their criminal background as a condition of employment.  The class alleged that Domino’s standard form violated the FCRA; Domino’s moved to dismiss; and the court ruled for the class.  Here’s what happened:

The FCRA states at 15 U.S.C. Sec. 1681b(b)(2)(A)(i) that before an employer conducts a background check, the would-be employee must be given and a disclosure form which notifies them “in a document that consists solely of the disclosure,” that the employer may or will be running a background check.

Domino’s asked employees to sign standard forms which stated that they knew Domino’s would be running a background check, were allowing Domino’s to do it, and were waiving any right they had to sue Domino’s or the background checker over the results.

The class action alleged that Domino’s “willfully” violated the FCRA at 15 U.S.C. Sec. 1681b(b)(2)(A)(i) because:  1) the law requires the disclosure document to consist “solely” of the disclosure; but 2) Domino’s threw in a release of liability as well.

Domino’s moved to dismiss the claim on several grounds, the most interesting of which (to me) is that the class action complaint did not provide enough detail to support its claim that Domino’s willfully violated the law.  As background, this class action will be a headache for Domino’s if and only if Domino’s “willfully” violated the law.  If the violation was negligent, the class would only get actual damages, which would likely be little or nothing.  If the violation was “willful,” then the class could get $100 to $1,000 per violation – which given the number of Domino’s employees could be a pretty hefty sum.

The court essentially refused to dismiss the claim, on the grounds that the FCRA provision is pretty obvious – “solely” means what it says – such that the plaintiff class did enough by pointing to the disclosure form’s extra language and claiming that Domino’s must have put it there willfully.

In short, the court held that no, FCRA disclosure statements cannot include releases, or for that matter anything else:  they must “solely” consist of a release and nothing else.

A question that I would have liked to see the court address:  did the class members actually release Domino’s and/or the background checkers from liability through the release that was in the disclosure form.  In other words, even if the release shouldn’t have been where it was in the paperwork, was it effective?  Can a person release a corporation from liability under the FCRA?  Domino’s didn’t ask, so the court didn’t say.

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Free reports, but not from the big three

December 14, 2012 Leave a comment

The FCRA requires the big three consumer reporting agencies – Experian, Equifax, and Trans Union – to establish a free site through which consumers can obtain one free credit report a year from each agency.

The FCRA does not require other CRAs – which are called nationwide specialty consumer reporting agencies at 15 USC 1681a(x) – to make their free reports available through this central website, but it does require them to give consumers free reports once a year.  So once a year, consumers should also be able to get free criminal background reports, landlord/tenant reports, check reports, etc. from the various and sundry other CRAs that supply them.

The question is:  how?  With the big three, it’s easy:  just go to the centralized site and proceed from there.  With the specialty CRAs, it’s not as clear.

The Consumer Financial Protection Bureau has noticed this, and it’s on the case.  It just issued a bulletin which reminds the specialized CRAs to have a  “streamlined process” in place to enable consumers to get their free annual report.  The bulletin is not terribly specific on what the streamlined process is supposed to be, but it does give the reader some idea.  Perhaps more importantly, it tells the world that the CFPB is on the loose.

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The intersection of FCRA, criminal records, and civil rights: the FTC punts

December 7, 2012 Leave a comment

I’ve discussed before the issues that surround the use of criminal background reports, through which FCRA-regulated consumer reporting agencies provide criminal records to employers, and civil rights law.  Employers are unlikely to hire applicants with criminal records.  Minorities are disproportionately likely to have criminal records.  This means that when employers use criminal background reports, minorities are probably affected more than other groups.

Whether this is a problem that should have a legislative solution is up for debate.  The EEOC has suggested that employers can be liable for civil rights violations when they use criminal background reports.

Today, the FTC – which continues to have some responsibility for enforcing the FCRA – submitted written testimony to the US Civil Rights Commission, which it intends to use in reviewing the EEOC’s suggestions.

Interestingly (or not), the FTC testimony doesn’t really say anything at all about civil rights.  It just explains what the FCRA does by walking the reader through some of its main provisions.  The conclusion is especially vague, saying only:

“The FCRA includes significant protections relating to the use of consumer reports for employment purposes, and the FTC is committed to using all of the tools at its disposal to ensure that job applicants and employees are protected. We look forward to continuing to work in this important area.”

This either means that the FCRA does so much to protect consumers that nothing more is necessary, or nothing at all.  My money is on the latter.

Long story short:  if anyone is going to make a suggestion about whether and how criminal background reports should be regulated given civil rights issues, the FTC is not going to go first.

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