The Federal Trade Commission charged a background check company, HireRight Solutions Inc., with violating the Fair Credit Reporting Act for failing to ensure the accuracy of reports provided to employers. This represents progress in regulating an industry that provides criminal background checks for 9 in 10 companies but has allowed flawed data to damage job seekers. As part of a settlement, HireRight will pay penalties and improve procedures to update records and notify consumers of disputes. However, more oversight is still needed of an industry that has grown with little regulation.

1. For far too long, the federal government has neglected its responsibility for regulating the companies
that provide criminal background checks used by 9 in 10 companies to screen job applicants. The
damage done to job seekers by flawed and unreliable data — a common problem with such services —
can be devastating.
This week, the Federal Trade Commission for the first time charged one such background check
company, HireRight Solutions Inc., with violating the Fair Credit Reporting Act, which requires
companies to ensure the accuracy of the reports. The lawsuit — and the resulting settlement, which
was announced at the same time — represent a good regulatory start. But federal and state
governments need to do more to protect people from this industry, which has grown so quickly that
no one seems to know how many companies there are.
The Fair Credit Reporting Act was intended to protect consumers from incorrect information that
often lurks in the public records that background companies draw on for their reports. For example,
the law requires background check companies to notify people in a timely manner when their data is
being sent to an employer — so inaccuracies can be challenged — or to ensure that the public record
that is being reported is complete and current.
HireRight Solutions, which has been accused by job applicants of violating the law in the past, may
have come to the federal government’s attention because of a class-action suit that the company
settled last year. The F.T.C.’s complaint alleged that the company had failed to follow reasonable
procedures to prevent obviously inaccurate information from being provided to employers and, in
many cases, even included the records of the wrong person. The commission contended that these
failures led to consumers being denied employment or other employment-related benefits.
The company has signed a consent decree that requires it to pay $2.6 million in penalties and adhere
to several stipulations: provide consumers with information in their files in a timely manner upon
request; promptly notify people who dispute their background reports about the outcomes of the
investigation; and follow procedures to update reports to reflect the current public record, including
the expungement or dismissal of criminal charges. Most important, the company must submit to
monitoring by the F.T.C.
This case puts the industry on notice. Inaccuracy is a huge problem when companies buy records in
bulk — either from the courts or from other companies — and fail to keep them current. The
standards in this settlement should be applied to all such businesses.
The F.T.C. and the Consumer Financial Protection Bureau, which share jurisdiction, need to step up
their scrutiny of the entire industry, which is playing a bigger and bigger role for employers in hiring
decisions.