Background check firm settles FCRA class action for $18 million

Posted on: December 5th, 2013 by Steve Larson

Scanning of transferring files.Two units of Verisk Analytics Inc. agreed to pay $18.6 million to settle three proposed class actions accusing them of violating the Fair Credit Reporting Act by failing to give consumers copies of their consumer reports prior to delivering the reports to prospective employers.

Intellicorp Records Inc., a nationwide provider of consumer reports including criminal background checks, and Insurance Information Exchange LLC, which also provides background reports, were facing allegations they either provided incorrect, outdated or incomplete information to potential employers.

Each of the plaintiffs allege that the companies violated the FCRA in two ways: first, that the defendants violated the core “accuracy” provision of the FCRA, and second, that Intellicorp violated a provision requiring the companies to notify consumers “at the time” it furnishes and sells a consumer report to an employer if the background checks were not accurate.

“The … claim alleges that the defendants failed to use ‘reasonable procedures’ necessary to ensure the ‘maximum possible accuracy’ of the reports they sell. Each of the plaintiffs allege that Intellicorp violated this provision when it issued inaccurate and incomplete reports about them to their prospective employers,” the motion for preliminary approval of the settlement said.

The companies deny the allegations and maintain that they complied with the FCRA, the motion said.

“Following three days of in-person mediation and many subsequent arm’s-length negotiations, and in light of the uncertain outcome and the risk of further litigation, including proceedings involving class certification, the parties reached the terms of the proposed settlement,” the motion said.

The plaintiffs seek to certify a class comprised of consumers who were the subject of one or more consumer reports furnished to a third party by Intellicorp or IIE, for employment purposes, which contained an Intellicorp “Criminal SuperSearch” result reflecting a record of criminal or traffic arrest or conviction or other criminal history, during the period from April 16, 2010, through September 16, 2013.

“The settlement provides substantial monetary and nonmonetary relief. These include cash disbursements by the defendants totaling $18.6 million, the monetary value of free consumer reports to all class members upon request, which a consumer reporting agency may charge up to $11.50 to provide. If only 10 percent of class members obtain their reports, the economic value would exceed $600,000, not including the economic value of corrected files used by class members to obtain employment,” the motion said.

The motion said the settlement also provides for significant nonmonetary benefits to class members, including an expedited dispute process and the legal help of class counsel for that process, as well as corrected procedures for future job applications.