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A ‘few sensible words’ added to background check disclosure form did not violate FCRA

By Lorene D. Park, J.D.

Granting judgment on the pleadings with respect to Fair Credit Reporting Act claims against two companies that provide driving services by connecting independent drivers with those seeking rides, a federal district court in Massachusetts concluded that an online disclosure to an unsuccessful applicant that a background check would be done was “clear and conspicuous” and “a few sensible words explaining the reason for the background check could hardly qualify as an ‘objectively unreasonable’ act” supporting a claim for a willful FCRA violation. The plaintiff’s state law claims also failed (Goldberg v. Uber Technologies, Inc., April 6, 2015, Stearns, R.).

In July 2014, the plaintiff applied through Rasier to be a driver for Uber Technology. The first step in the online application process required him to complete a “FREE online background check.” A text box entitled “Background Check Terms” stated: “Rasier, LLC, the entity that contracts with drivers who provide peer-to-peer transportation requested through the Uber app, is committed to safety. As part of that commitment, Raiser uses a third-party vendor to conduct criminal background check, motor vehicle record check, and other checks. Please review the below disclosure/authorization and release.” The plaintiff electronically accepted the terms and finished the application. On July 29, Rasier emailed him two background reports compiled by Hirease, LLC. On August 4, a third report was emailed to him that included an FCRA “Summary of Rights.” The cover email stated that the “consumer report was used only for purposes of determining your eligibility as an independent contractor” and that “a decision is pending regarding your proposal. The contents of the enclosed report are under review and are being considered with regard to your proposal.”

The August 4 report disclosed that the plaintiff had a pending federal indictment for “conspiracy to manufacture, possess with intent to distribute and to distribute marijuana.” He emailed Uber the next day explaining that he had never been convicted of any crimes and Uber responded that it would take that information “into consideration.” On August 12, Rasier notified the plaintiff that his application was rejected, in part due to the information obtained through the consumer reporting agency. He asked Uber to reconsider and received a response stating that “Uber does not employ drivers or own any vehicles. Our background checks are meant to ensure that we are connecting riders with the safest rides on the road.” The plaintiff filed a putative class action alleging willful or negligent violation of the FCRA, as well as violations of several state laws. Uber and Raiser moved for judgment on the pleadings under Rule 12(c).

“Clear and conspicuous” disclosure with few added words was okay. The defendants argued that the plaintiff lacked Article III standing for his FCRA negligence claim because he had no actual damages. Although the plaintiff pointed to the lost opportunity of being an Uber driver, the court noted that the FCRA does not guarantee a right to employment. As a fallback, he asserted that he need not plead actual harm for a claim of willful FCRA violation. He claimed the defendants willfully violated the Act by failing to make a “clear and conspicuous” disclosure in a document consisting “solely of the disclosure” in obtaining his authorization for the background check. Specifically, the text box only showed the first three lines and you had to scroll down to view the whole authorization. Moreover, it did not limit itself “solely” to the disclosure because the preamble iterated Uber’s commitment to passenger safety.

Rejecting this claim, the court noted that the plaintiff conceded that the document was conspicuously titled “Background Check Terms” and the visible lines informed the reader of the full scope of the checks to be conducted, including the criminal background check. That is all the FCRA required, said the court, and “a few sensible words explaining the reason for the background check could hardly qualify as an ‘objectively unreasonable’ act.”

No need for advance notice of adverse action. Also rejected was the plaintiff’s argument that defendants acted willfully in failing to inform him of their intent to act adversely on his application before acting adversely on his application. The court pointed to the plain text of the FCRA and found no requirement of an advance notice of intent to take an adverse action. Rather, it requires that before taking an adverse action based on the report, the individual be provided with a copy of the report and a description of his or her consumer rights. For these reasons, judgment on the pleadings was granted as to the FCRA claims.

State law claims. The plaintiff’s Massachusetts Consumer Credit Reporting Act claim also failed because it was preempted by the FCRA. His claim under the Massachusetts Criminal Offender Record Information (CORI) law also failed because the plaintiff did not allege that he had a criminal record and CORI does not provide him with a private right of action.