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CONSUMER PROTECTION; CRIMINAL RECORDS; LIABILITY, LEGAL;

OLR Research Report


December 11, 2009

 

2009-R-0447

CRIMINAL BACKGROUND CHECKS BY CONSUMER REPORTING AGENCIES

 

By: James Orlando, Legislative Analyst

You asked how other states regulate background checks by consumer reporting agencies. You also asked whether states authorize a private cause of action to enforce the law or whether there are other enforcement options.

SUMMARY

Many employers routinely conduct background and credit checks for employment purposes. Consumer reporting agencies who conduct background checks report personal and financial information about the applicant, including matters of public record such as bankruptcies, outstanding judgments, tax liens, and criminal convictions.

The federal Fair Credit Reporting Act (FCRA) (15 U.S.C. 1681 et seq.) provides guidelines for consumer reporting agencies conducting credit and background checks. Several states have enacted legislation closely modeled after the federal FCRA. The other New England states all provide mechanisms for consumers to challenge inaccurate information contained in a background check or other consumer report. These states also provide for a combination of private causes of action, administrative enforcement, and criminal sanctions to enforce compliance with their consumer reporting requirements.

Of the other New England states, Maine, Massachusetts, and New Hampshire have statutes setting standards for the accuracy of public record information in consumer reports used for employment purposes. Massachusetts requires that consumer reporting agencies maintain reasonable procedures to insure the accuracy of public record information contained in a consumer report.

For information on recent changes to Connecticut law regarding deletion of erased records reported by consumer reporting agencies, see OLR Report 2009-R-0357.

DISPUTING INACCURACIES IN CONSUMER REPORTS OR BACKGROUND CHECKS

The other New England states all provide mechanisms for a consumer to dispute an item in a consumer report or background check prepared by a consumer reporting agency. All of these states except Vermont require that if information contained in a consumer report or background check is later found to be inaccurate, the consumer reporting agency, upon the request of the consumer, must notify prior recipients of the report. The consumer reporting agency must notify any person who received the report within two years for employment purposes or within six months for any other purpose.

The states have different requirements regarding the timeline within which the consumer reporting agency must begin the reinvestigation into the alleged inaccuracy, as well as how long the agency has to delete the information if it is found to be inaccurate. Table 1 describes the requirements in each of the other New England states.

Table 1: Deadlines for Consumer Reporting Agency Following Consumer Dispute

State

Time to begin reinvestigation

Time to delete information found to be inaccurate or no longer verified after reinvestigation

Maine

Within 21 calendar days of notification of the alleged inaccuracy by the consumer, unless reasonable grounds to believe dispute is frivolous

Promptly

Me. Rev. Stat. Ann. tit. 10, 1317

Massachusetts

Within 30 business days of notification of the alleged inaccuracy by the consumer, unless reasonable grounds to believe dispute is frivolous or irrelevant

Within 3 business days

Mass. Gen. Laws ch. 93, 58

New Hampshire

Within 30 days of notification of the alleged inaccuracy by the consumer, unless reasonable grounds to believe that the dispute is frivolous or irrelevant

Within 10 business days

N.H. Rev. Stat. Ann. 359-B:11

Table 1: -Continued-

State

Time to begin reinvestigation

Time to delete information found to be inaccurate or no longer verified after reinvestigation

Rhode Island

Within 30 calendar days of notification of the alleged inaccuracy by the consumer, unless reasonable grounds to believe that the dispute is frivolous or irrelevant

Promptly

R.I. Gen. Laws 6-13.1-23

Vermont

Within 30 business days of notification of the dispute by the consumer, unless reasonable grounds to believe that the dispute is frivolous or irrelevant

Promptly

Vt. Stat. Ann. tit. 9, 2480d

CIVIL AND CRIMINAL LIABILITY

The other New England states provide private causes of action for consumers to seek redress for violations of consumer reporting statutes. The states generally allow for greater recovery in the case of willful, as opposed to negligent, violations. Table 2 describes the causes of action available in each state.

Table 2: Civil Liability for Violations of Consumer Reporting Laws

State

Potential liability

Maine

Willful noncompliance—actual damages, treble damages, costs, and attorneys fees.

Negligent noncompliance—actual damages, additional damages of at least $100 for each violation and for each consumer report containing inaccurate information that contributed to the decision to take adverse action against the consumer, costs, and attorneys fees.

Me. Rev. Stat. Ann. tit. 10, 1322-23

Massachusetts

Willful noncompliance—actual damages, punitive damages, costs, and attorneys fees.

Negligent noncompliance—actual damages, costs, and attorneys fees.

Mass. Gen. Laws ch. 93, 63-64

New Hampshire

Willful noncompliance—actual damages or $1000 (whichever is greater), punitive damages, costs, and attorneys fees.

Negligent noncompliance—actual damages or $1000 (whichever is greater), costs, and attorneys fees.

N.H. Rev. Stat. Ann. 359-B:16-17

Rhode Island

Negligent noncompliance—if compliance not achieved within three working days of notification of noncompliance: $10 for each day of noncompliance beginning on the fourth day following the date that the credit bureau is notified by the consumer of the noncompliance, actual damages, costs, and attorneys fees.

R.I. Gen. Laws 6-13.1-25

Table 2: -Continued-

State

Potential liability

Vermont

Any violation—damages, injunctive relief, costs, and attorneys fees.

Willful violation—actual damages or $100 (whichever is greater), punitive damages, injunctive relief, costs, and attorneys fees.

If violator is a credit reporting agency, the court may award actual damages or $100 (whichever is greater), even for non-willful violation.

Vt. Stat. Ann. tit. 9, 2480f

The other New England states also provide criminal liability for various violations of consumer reporting laws, including obtaining information under false pretenses or falsifying information in a consumer report. The states also make violations of consumer reporting laws unfair trade practices or deceptive trade practices that are enforced by the state's attorney general or division of consumer protection. The federal FCRA includes similar provisions that are enforced by the Federal Trade Commission (15 U.S.C. 1681s).

SPECIFIC PROVISIONS APPLICABLE TO PUBLIC RECORD INFORMATION FOR EMPLOYMENT PURPOSES

Maine, Massachusetts, and New Hampshire have statutory provisions outlining standards regarding the accuracy of public record information contained in consumer reports generated for employment purposes. These provisions are modeled closely after the federal FCRA (15 U.S.C. 1681k). All three states have substantially similar provisions providing that when a consumer reporting agency furnishes a consumer report for employment purposes and reports matters of public record that are likely to have an adverse effect upon the consumer's ability to obtain employment, the consumer reporting agency must: (1) notify the consumer that public record information is being reported, along with the contact information for the recipient of the report, or (2) maintain strict procedures to insure that any potentially adverse public record information is complete and up to date. Records are considered up to date in all three states “if the current public record status of the item at the time of the report is reported” (Me. Rev. Stat. Ann. tit. 10, 1318; Mass. Gen. Laws ch. 93, 60; N.H. Rev. Stat. Ann. 359-B:13).

Massachusetts further requires that consumer reporting agencies maintain reasonable procedures to insure that public record information contained in a consumer report is complete and up to date to the extent practicable. According to the statute, “[i]t shall be deemed a reasonable procedure for a consumer reporting agency to accurately report the status of public record information as of the date recorded in its files provided that such information is updated on a regular basis” (Mass. Gen. Laws ch. 93, 60A).

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