A company that screens prospective employees for thousands of firms nationwide agreed to pay $2.6 million to settle charges that it did not take adequate steps to verify the accuracy of criminal background checks.
The civil penalty to be paid by Oklahoma-based HireRight Solutions is the second largest obtained by the Federal Trade Commission (FTC) for violations of the law that governs use of consumer information, including data gathered to determine job eligibility. The largest fine was the $10 million that data broker ChoicePoint paid six years ago after it was accused of failing to secure the personal information of more than 160,000 people.
HireRight, owned by holding company Altegrity in Falls Church, Va., did not admit wrongdoing.
In a complaint filed on behalf of the FTC by the Justice Department, the government alleged that HireRight broke the law when it failed to assure the accuracy of its screening reports, give consumers copies of their reports or investigate disputes raised by consumers about information in their reports.
The violations involved criminal record checks. The FTC alleged that HireRight sometimes included criminal offenses that had been expunged or reported the same offense multiple times in a report, so that job candidates appeared to have a more extensive criminal record than they actually had. At times, the FTC said, the company simply reported the wrong information or had the wrong person.
As a result, many consumers were denied employment or employment-related benefits for the wrong reason, the government concluded. Regulators declined to disclose how many people were affected by the alleged failures.
"It's difficult enough in this economy to find employment," said Anthony Rodriguez, a staff attorney at the FTC's Bureau of Consumer Protection. "People shouldn't have to worry about dealing with background screening information that's inaccurate."
The FTC said its case against HireRight marks the first time the agency has charged an employment background screening firm with violating the Fair Credit Reporting Act, which governs the accuracy and privacy of personal information kept by credit reporting firms. In June, the FTC obtained an $800,000 settlement from Spokeo, a California data broker that used social media sites to compile profiles of consumers for potential employers. The FTC accused Spokeo of misusing the data it collected, including the addresses, marital status, hobbies, ethnicity and religion of people it was screening.
In that case, the FTC alleged that Spokeo did not take reasonable steps to verify the accuracy of the information it was disbursing to potential employers.