Spokeo decision and its effect on the screening industry

  • 6/17/2016
  • Raquel Trevino
Spokeo decision and its effect on the screening industry image
On July 20, 2010, Thomas Robins filed a complaint against Spokeo, Inc. for Violations of the Fair Credit Reporting Act for which he demanded a Jury Trial as a Class Action. The nature of the action was based on the collection and dissemination of consumer reports in violation of the FCRA. Robins pointed out that Spokeo operates a website that allows users to search for a consumer by name, email address, or phone number. In response to a free query Spokeo provides a report that displays, among other things, an individual consumer’s address, phone number, marital status, approximate age, occupation, approximate household value, hobbies, economic health, and wealth level. Spokeo provides even more extensive information to paid subscribers. Despite the Spokeo’s practices, the company publicly maintains that it is not a consumer reporting agency. Robins maintains that Spokeo has been unlawfully operating and profiting as a consumer reporting agency (CRA) since its inception.

The case maintained that an “unnamed person” accessed Robins’ profile through Spokeo and the inaccurate information harmed Robins’ employment prospects. The inaccurate profile stated he was married, had children, was in his 50s, had a job, was relatively affluent and held a graduate degree. On the May 16, 2016 hearing, the court decided that the plaintiff had been unable to prove that there had been any harm. The U.S. Supreme Court decision was to send the case back to the Ninth Circuit to determine if there were facts of a harm, since they failed to consider both aspects of the injury-in-fact requirement (particularized and concrete).

With this in mind, here are some implications this has on the Background Screening industry:
  • CRAs have strict compliance obligations and must follow reasonable procedures to assure maximum possible accuracy of consumer reports.
  • CRAs must notify providers and users of consumer information of their responsibilities under the FCRA.
  • CRAs must limit the circumstances in which they provide consumer reports i.e. “for employment purposes”.
  • CRAs must post toll-free numbers for consumers to request reports.

After the court evaluation of this case employers should keep a few things in mind as well:
  • Always have a reliable CRA conduct your background checks. The inaccuracies reported by instant search websites can cause concrete harm and place your company at risk.
  • Ensure proper use of Disclosure Forms, Pre-Adverse, and Post-Adverse Action Notices
  • Discuss with your legal counsel to establish (or review) a compliance plan; develop written policies and procedures and communicate regularly with your CRA regarding updates on compliance issues.