Background checks are often a necessary part of the hiring process, but there is little oversight for the reporting practices of some of the largest background check companies. Colorado resident Elsie Compo is hoping to change this.
By Matthew Van Deventer
When Elsie Compo applied for a job at Wal-Mart, she was quickly denied employment after the company ran a background check on her.
Her background check, which was processed by one of the country’s largest background check companies, Sterling Infosystems Inc., noted that Compo had been a resident of a high-risk residential facility. Those are facilities whose residents are considered a significant public safety risk and may be undergoing evaluation or rehabilitation.
That was not the case with Compo. While struggling with homelessness, she was a member of The Gathering Place (TGP), a daytime drop-in shelter for women, children, and transgender women. Like many others, Compo received her mail at TGP and used its address as her permanent address on job applications. TGP is a day center, not a residential facility, and the term “high-risk” is not an accurate description of its clients.
“I knew that it was a mistake,” said Compo in an email about the background check. “And there was all kinds of other stuff wrong too—like they have me living at lots of different addresses. It’s wrong and unfair.”
Unfortunately, this is not an isolated case. Thousands of people across the country, no matter their socioeconomic status, are victims of incorrect data reporting, according to David Seligman, the Towards Justice attorney who is representing Compo in an existing class action lawsuit against Sterling.
“It makes her appear to be more transient, less employable, and in general less the kind of person that someone’s going to hire, than if she had an accurate report,” said Seligman.
According to court documents for Compo’s case, this is not the first time Sterling has been accused of reporting faulty information. In 2015, it settled a class action lawsuit and agreed to pay damages and stop reporting incorrect data. The documents go on to say that the company considers certain consumers’ addresses at hotels, motels, rooming houses, boarding houses, or personal care facilities to be high-risk facilities—but it is this type of subjective definition that harms people like Compo.
Technically, Compo is not alleging she was denied employment at Wal-Mart because of the background check, despite that being the case. Rather, she is suing over Sterling’s careless reporting procedures, claiming the company violated the Fair Credit Reporting Act, or FCRA. Fighting her denial of employment may provide her with an individual win, but it wouldn’t necessarily tackle the bigger issue: that Sterling regularly misreportsinformation, which could hinder thousands of peoples’ abilities to get a job.
The FCRA wassigned into law in 1970 and is enforced by the U.S. Federal Trade Commission. The federal legislation protects consumers’ personal information and promotes accuracy in reports like credit and background checks gathered by consumer agencies.
Per the law, a company is required to provide plausible evidence that they are denying an applicant employment because of a note on their background check.
Compo and Towards Justice are bringing claims against Sterling that “they weren’t following reasonable procedures in verifying the accuracy in some of the things they report,” among other allegations, said Seligman.
Sterling did not respond to requests for comment. Julia Stewart, TGP’s vice president of internal resources, assumes Sterling runs some sort of algorithm to characterize different organizations like The Gathering Place. Regardless of the method in place, it has clearly proven to produce inaccurate information and can impact peoples’ lives negatively.
“[Sterling] not only misclassified us as a residential facility, but then they took the extra step of characterizing that and flagging us as high-risk,” said Stewart.
In the 31 years TGP has been open, no other member has been in this situation, to Stewart’s knowledge.
Stewart continues, “So, somehow, just by virtue of receiving mail at The Gathering Place, [Sterling is] saying this makes someone high-risk to hire for a position.”
Information about people’s lives is bought and sold online by companies like Sterling—and sometimes with a large price tag, according to Seligman. However, there are few measures, if any, taken to ensure the information is up-to-date and accurate. And somewhere along the line, The Gathering Place was labeled a high-risk facility by Sterling, an error that proved incredibly detrimental to Compo.
Seligman believes Compo’s case could set a precedent for better enforcement of the Fair Credit Reporting Act, and that’s one reason why it’s important for people in her situation to file suit. “Otherwise these companies have very little incentive to follow the law,” continues Seligman.
Compo said when she received her background check she was mad and eager to take action to fight for her rights and the rights of the countless others who have been affected by inaccurate background reporting procedures. “I want to stand up for my rights and stand up for the rights of all who’ve been harmed.” Compo continued, “I would like to lay the foundation to prevent these companies from lying about people who’re just trying to get a job.” ■