May 6, 2024

A hotel brand management company and consumer reporting agency (CRA) have reached a settlement agreement in a class action lawsuit. This agreement addressed how the two companies violated the Fair Credit Reporting Act (FCRA) when supplying and using background checks for employment. The settlement amounts to over $630,000 and will resolve claims by those subjected to consumer reports by the two companies during the claim period.

The Suit

The complaint against the companies revealed that the company violated the FCRA when requesting and using the CRA’s furnished consumer reports. For example, the employer failed to provide potential job candidates with a clear and conspicuous disclosure and written authorization before attempting to procure a consumer report. The company also allegedly failed to provide copies of any report and other required information before taking adverse employment-related actions based on the report.

Against the CRA, the class action makes similar complaints. Under 15 U.S.C. § 1681b(b)(3)(A)(i) -(ii), agencies must provide certain information before taking adverse action based on the contents of a consumer report. The complaint argued how the FCRA states, “in using a consumer report for employment purposes, before taking any adverse action based in whole or in part on the report, the person intending to take such adverse action shall provide to the consumer to whom the report relates . . . a copy of the report[.]”

As such, the suit claimed that the CRA failed to obtain suitable certification from the employer, written authorization, and, when applicable, a pre-adverse action notice. Under the FCRA, CRAs may furnish a consumer report for employment purposes only if the person requesting it certifies that it has complied with paragraph (2) and, when applicable, paragraph (3).


These paragraphs require those using consumer reports to provide suitable disclosure and written authorization for employment purposes. This step is necessary before receiving the report and before taking adverse action due to the information found in it. Allegedly, the CRA provided thousands of consumer reports for the employer without certifying FCRA compliance with the mentioned paragraphs.

In this settlement agreement, both companies maintained that they were innocent of the suit’s allegations. However, they agreed to pay $630,000 into a fund to distribute to eligible individuals.

According to the settlement, impacted individuals can receive a check worth up to $100; members of a subclass of the company could receive up to $200. The case automatically benefits all class members, though anyone may opt-out by May 20, 2024.

Information provided here is for educational and informational purposes only and should not constitute as legal advice. We recommend you contact your own legal counsel for any questions regarding your specific practices and compliance with applicable laws.