In a turnaround which will possibly excite employers, the rate of Fair Credit Reporting Act (FCRA) lawsuits is declining. This is according to the latest statistics released by ACA International – the official website of the Association of Credit and Collection Professionals.
ACA International regularly monitors the trends of FCRA litigation across the United States. Its latest figures show that the number of FCRA lawsuits declined from April to May 2016. In April, a total of 357 FCRA lawsuits were filed across all industries, and all categories of FCRA violations.
In May, the number of lawsuits filed declined to 302. This basically means that the number of lawsuits dropped by 15.4 percent. This decline is actually good news for employers. It means that the possibility of getting sued for FCRA violations is becoming smaller.
The exact reason for the overall decline in FCRA lawsuits is unclear. However, it seems a result of organizations becoming increasingly knowledgeable about FCRA compliance. Over the last few months, the Federal Trade Commission (FTC) has stepped up efforts to educate employers about FCRA compliance.
At the beginning of May 2016, the FTC actually released a new guidance for FCRA compliance. Although the guidance was mainly aimed at background screening companies, it also contains compliance guidelines which are helpful for employers. As such, many organizations have been using them to boost their compliance efforts.
These new guidelines were actually released at a time when many organizations were seeking to make their internal policies compliant. This is thanks to some well-publicized FCRA lawsuits which gave many employers the jitters. As such, organizations were looking for the safest ways to improve their FCRA compliance and were more than happy to adopt the recommendations provided in the FTC guidance.
The FTC guidance provides organizations with practical tips which they can use to improve their FCRA compliance. The end result is that organizations are more knowledgeable on how to avoid lawsuits. This is perhaps the reason why the overall number of FCRA lawsuits are decreasing.
Generally speaking, when organizations are knowledgeable about FCRA compliance, they are less likely to commit FCRA violations. As a result, the likelihood of them getting sued significantly reduces.
However, although the number of FCRA lawsuits declined from April to May 2016, this isn’t a reason for organizations to slacken off, become complacent or reduce their vigilance as regards FCRA compliance.
For starters, the number of FCRA lawsuits filed in May 2016 is still much higher than the lawsuits filed in May 2015. According to ACA International, a total of 1,230 FCRA lawsuits were filed in May 2015. This year, the number of filings increased to 1,550. This basically means that overall, the number of FCRA filings has increased by 26 percent over the past year.
Therefore, despite the FCRA lawsuit decline from April to May 2016, the general trend shows that the number of lawsuits is actually increasing. Therefore, the brief drop shouldn’t be a reason for organizations to slacken off.
Secondly, as a matter of principle, organizations need to avoid basing their compliance efforts on trends of litigation. Granted, it is important to keep track of the litigation trends. However, to be on the safe side, an organization needs a clear, concise and consistent framework for complying with not just FCRA, but all other relevant legislations as well. Otherwise, even though the number of FCRA lawsuits keeps dropping, it won’t be to the benefit of any specific organization when it turns out that they are one of the few who have gotten sued.
Ultimately, the decline in FCRA lawsuits is a good sign. It shows that many organizations are perhaps becoming more vigilant about FCRA compliance. This means that employees and applicants – the categories of people the FCRA is intended to protect – are being treated much better. This is generally a good thing.
However, the apparent FCRA lawsuit decline shouldn’t become a reason for complacency. The number of lawsuits filed in May 2016 is still higher than in the ones filed in May 2015. This means that organizations still run a significant risk of getting sued. Therefore, each organization (that doesn’t want to get sued) should take steps to ensure that its FCRA compliance standards are up to par. A good place to start is by studying the FTC’s new guidance, which can be viewed on the FTC website, right here.
