There is clear and significant risk to a consumer reporting agency (CRA) in potentially violating the accuracy, completeness and best possible source requirements of the federal Fair Credit Reporting Act (FCRA) and its state law equivalents, with use of alternative sources as a substitute for a primarily used index sourced county criminal court record search.
This risk includes:
- Loss of business and lawsuits from the CRA’s end-user customers;
- Lawsuits from consumers;
- Lawsuits from third parties;
- Enforcement actions from federal and state regulators;
- Harm to the CRA’s brand and reputation.
As COVID-19 related court closures continue, the industry noise about the use of “alternative sources” for county criminal court record searches has grown.
The “noisemakers” acknowledge the inherent risk in the use of alternative sources, but downplay it by offering limited risk mitigation tactics, such as “be transparent with your end-user customer; tell them you are using alternative sources; have them agree to the use of such sources.”
Good advice. If done well, such tactics address some of risk #1 above. Some because this solution ignores where there are statutory prohibitions against persons with certain types of offenses and/or require specific types of criminal record searches be done (e.g., Transportation Network Companies, healthcare, financial services, licensing, etc.).
But what of risks 2, 3, 4 and 5?
Transparency with the end-user customer does nothing to address these other significant risks. The serious potential for consumer litigation related to inaccurate or incomplete information (e.g., not my record, misdemeanor, not felony, non-conviction, not conviction, etc.) remains, as does third party claims for harm caused by missed records (for example, a person hired for job they are unfit or unqualified for). Transparency does nothing to address consumer lawsuits or governmental enforcement actions.
Caveat emptor. Buyer beware.