Federal District Court Judge Petrese B. Tucker ruled this week against General Information Services, Inc., a major background screening provider, in its motion that the Fair Credit Reporting Act (FCRA) is unconstitutional. In what is predicted to be one of the largest class-action lawsuits brought against a consumer reporting agency, the U.S. Department of Justice successfully argued against GiS’s defense.
The FCRA regulates the collection, maintenance, and disclosure of consumer reports by CRAs, including public record information. When a CRA, such as GiS, produces a copy of a consumer’s report to the consumer or a third-party (such as employers), the CRA is required to exclude, inter alia, “adverse items of information, other than records of convictions of crimes which antedates the report by more than seven years”. The statute also demands that consumer reporting agencies exclude records of arrest that antedate the report by more than seven years.
Around early 2010, Shamara King applied for a job with the United States Postal Service, which ordered a background check from GiS during the application process. The report that GIS returned contained ten nolle prossed (dismissed) charges from July of 2000: these arrest records were nearly a decade old. Ms. King’s consumer report also disclosed other inaccurate or misleading information. On March 4, 2010, GiS mailed Ms. King a copy of the consumer report that had been sent to the Postal Service earlier. After being turned down for the Postal Service job due to this report, Ms. King brought a class-action suit against GiS for its alleged failure to comply with section 1681c of the FCRA. She alleged that GiS maintained a policy and practice of willfully reporting outdated adverse public information, including records of arrest, that is required to be excluded from the consumer reports it sells.
Accepting all of the facts alleged in the Complaint to be true, GiS’s defense challenged the constitutionality of section 1681c of the FCRA. GiS claimed that the FCRA itself was unconstitutional since it violated the CRA’s right to free speech by restricting the information allowed to be passed on to an employer.
The first issue the Court addresses in its denial of GiS’s motion was the nature of the speech between GiS and the United States Postal Service, the employer. The court wrote, “Applying these principles to the case at hand, this court finds that the consumer report information disseminated by GIS concerns purely private matters. The very fact that GIS compiles consumer reporting information for the purpose of making a profit and its business customers purchase such reports in order to make business decisions supports the proposition that the dissemination of this information is of sole interest to the speaker (GIS) and its audience (business customers). As such, the private nature of these consumer reports does not significantly contribute to public dialogue and, accordingly, this Court finds that such information warrants a reduced constitutional protection.”
The Court ruled that the FCRA was enacted to provide businesses with the most accurate and relevant information while simultaneously protecting the privacy rights of consumers. The stated purpose of the FCRA is “to require that consumer reporting agencies adopt reasonable procedures for meeting the needs of commerce . . . in a manner which is fair and equitable to the consumer.”
You can read more about the ruling here.