Capital One faces Fair Credit Reporting Act class action

Posted on: December 23rd, 2011 by Steve Larson
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On December 6, 2011, an employee of Capital One, filed a class action lawsuit in the United States District Court for the District of Maryland, alleging that Capital One illegally obtains background checks in violation of the Fair Credit Reporting Act.  Plaintiff seeks to represent a class of all Capital One employees and job applicants for the past three years.  Plaintiff Smith accuses Capital One of violating the Act in two ways.

First, the lawsuit alleges that Capital One’s authorization form is flawed.  The law imposes strict formatting requirements on companies who do background checks.  Mr. Smith alleges that by burying its background check authorization in a job application, including extraneous information, Capital One violated the law.  On this claim, Capital One may be liable to all employees and prospective employees who signed Capital One’s standard job application.

Second, the lawsuit also alleges that Capital One failed to provide copies of the reports when it used them to take adverse employment actions, such as refusing to hire an applicant, refusing to promote an employee or terminating an employee.  This practice also violates the Act, which requires companies to provide employees with copies of their background checks.

The Fair Credit Reporting Act exists in part to ensure employees have a say in who can pull their consumer reports and have an opportunity to contest any inaccuracies that they may contain.

The lawsuit is potentially valuable to class members.  Employees and prospective employees may be entitled to statutory damages of up to $1,000 for each violation.