Major Chain of Booksellers Settles Alleged FCRA Violations

August 8, 2023

A major chain of booksellers has agreed to a settlement to resolve a class action lawsuit. This suit addressed claims that it violated the Fair Credit Reporting Act (FCRA). According to the case, the bookseller willfully violated the FCRA by including extraneous language in its disclosures unrelated to consumer reporting.

The issues began when the named plaintiff applied to work for the bookseller. As part of the process, the bookseller sent the plaintiff an email linking to a website containing a consumer report disclosure. This link would authorize the employer to procure a background check. It included information found in a typical notice for performing a background check. 

However, at the end of the disclosure, it included the following text:

“Please note: Nothing contained herein should be construed as legal advice or guidance. Employers should consult their own counsel about their compliance responsibilities under the FCRA and applicable state law. [A consumer reporting agency] expressly disclaims any warranties or responsibility or damages associated with or arising out of the information provided herein.”

The plaintiff viewed this disclosure and authorized the bookseller to acquire a background check. Later, the plaintiff filed a class action against the bookseller. The plaintiff claimed that it had willfully violated the FCRA by including these extraneous details unrelated to the performance of a background check. This inclusion violated the FCRA’s requirement that a disclosure be a standalone document free of irrelevant information.

The employer moved for summary judgment, arguing that a reasonable jury could not find its violation was willful. The bookseller asserted that it did not intend to include extraneous language. This inclusion resulted from a drafting error when it attempted to adjust a sample disclosure. According to the bookseller, it received this sample from the consumer reporting agency contracted to conduct its background checks.

The trial court agreed with the employer and granted the motion for summary judgment in its favor. However, the plaintiff appealed this motion. As such, a California Court of Appeal reversed this ruling. It found that the failure to catch this mistake could prove willful by a jury. It then remanded the case to the trial court for further proceedings.

Both parties in these proceedings have reached a settlement agreement to resolve the lawsuit. Under this settlement, the bookseller agreed to a lump sum payment of $600,000 to cover necessary expenses and to distribute among class members.

As this case illustrates, employers should focus on FCRA compliance in any background check program. The best way to help ensure compliance is to partner with a trusted background check provider. The right partner will utilize their experience to ensure compliance with FCRA, state, local, and federal regulations.

JDP makes background checks easy and reliable. Speak with a compliance expert today.