Background Check, Consumer Report Companies Warned To Stop Name-Only Matching

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Background Check, Consumer Report CFPB Warning Overview: 

• Who: The Consumer Financial Protection Bureau (CFPB) issued an advisory opinion warning consumer reporting agencies to stop using name-only matching.
• Why: The CFPB says name-only matching is inadequate, illegal, error-prone, and harms consumers who lose out on loans, jobs, and even homes due to incorrect background checks.
• Where: The advisory opinion was issued to consumer reporting agencies nationwide.

The Consumer Financial Protection Bureau (CFPB) has advised the consumer reporting industry to stop using name-only matching to fulfill records requests for credit reports and background checks. 

Name-only matching is when a consumer reporting agency only uses a consumer’s first and last name to match them with a particular item of information, says the CFPB.

In an advisory opinion, the CFPB claims name-only matching is inadequate, illegal, error-prone, harmful to consumers, and violates the Fair Credit Reporting Act (FCRA).

Agencies that use name-only matching fail to cross-check the names with other personally identifiable information such as social security numbers, addresses, or date of births, the bureau says. 

‘Sloppy’ Background Checks Hurt Consumers, Others, Says Regulator

The CFPB reiterated that name-only matching hurts more than just the end consumer. For instance, a landlord who is relying on a correct screening may be misled about what would have been a solid future tenant. 

“These sloppy practices hurt all of us,” said CFPB Director Rohit Chopra, in a statement.

Communities of color are also disproportionately impacted by name-only matching, since the risk of mismatching consumers is greater for people who are Hispanic, Black, or Asian, on account of their having less surname diversity, says the CFPB. 

“As a result, these illegal acts further reinforce and exacerbate racial disparities in access to employment and affordable housing,” Chopra said. 

Consumer Report Companies Need to Use Better Procedures, Says CFPB

The CFPB said it issued the warning to try and ensure background screeners and reporting agencies use reasonable procedures to minimize the potential for consumer harm. 

“In many cases, firms will need to employ significantly more rigorous procedures, including individualized reviews of files, to assure maximum possible accuracy,” Chopra said. 

Chopra says the CFPB will work in close collaboration with the Federal Trade Commission (FTC) to ensure consumer protection is being taken seriously and to help monitor business models that “rely on harvesting and monetizing personal data.” 

The FTC is also being tasked to prosecute unfair or deceptive background screening practices that may not be covered by the Consumer Financial Protection Act, says the bureau.

The CFPB says it will also begin to prosecute violations of the FCRA while assessing civil penalties and seeking redress for victims in the form of restitution and damages. 

“In situations where sloppy practices lead to loss of employment and housing opportunities, the harms to victims can be substantial,” Chopra said. 

This is not the first time companies have been put under the microscope for alleged FCRA violations. 

A class action lawsuit was lodged against Uber and Lyft in 2015 by a consumer who claimed the ride-hailing companies violated the FCRA by not providing prospective drivers with clear background check disclosures. 

Also in 2015, a class action lawsuit was filed against Big Lots Inc. by a Philadelphia resident who claimed the company violated the FCRA by obtaining job applicants’ credit reports. 

Have you been the victim of mistaken identity due to name-only matching? Consider starting a class action lawsuit here! 

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