Fair Credit Violations for Background Check

Derek Wilson received a job offer as a relocation counselor in Washington, D.C., from Prudential, conditioned on an acceptable background check. On August 1, 2003, Prudential asked an outside organization, CARCO, to conduct a background investigation. After CARCO reported that Wilson had a pending criminal charge, Prudential withdrew its job offer, citing the background check.

    Wilson discovered that the charges were pending against persons with similar names, but different Social Security numbers and birth dates. Although CARCO corrected its report, Prudential did not hire Wilson.

    Wilson sued both Prudential and CARCO in the U.S. District Court for the District of Columbia for breach of contract, defamation and negligence.

    The court dismissed Wilson’s claim against Prudential for breach of contract because an offer of at-will employment can be withdrawn for any reason. As for Wilson’s defamation claim against CARCO, the court held that the Fair Credit Reporting Act limits such claims to malice or willful intent to injure. Wilson’s negligence claim was dismissed for failure to present expert testimony on the applicable standard of care and CARCO’s failure to meet that standard.

    The U.S. Court of Appeals for the District of Columbia relied on prior case law holding that a plaintiff must only “minimally present some evidence from which a trier of fact can infer that the consumer reporting agency failed to follow reasonable procedures in preparing a credit report. A plaintiff need not present direct evidence.” In some cases, the inaccuracy of the report itself is evidence of unreasonable procedures. CARCO had taken 36 days to complete its investigation. Wilson’s own investigation of the matter took 10 minutes. This was sufficient evidence of unreasonableness. Wilson v. CARCO Group Inc., D.C. Cir., No. 07-7053 (2/29/08).

    Impact: Employers should use diligence to correct any errors to background checks which they discover, or have brought to their attention.