Labor & Employment Law Daily Wrap Up, PRIVACY—E.D. Ky.: Reporting agency not automatically liable for FCRA violation based on inaccurate information, (Nov 18, 2025)

By Ronald Miller, J.D.

“Liability does not flow automatically from the fact that a consumer reporting agency reports inaccurate information.”

A consumer reporting agency that provided a criminal background check on a job applicant that contained erroneous information about a felony conviction was entitled to summary judgment against the applicant’s claimed violation of the Fair Credit Reporting Act (FCRA), ruled a federal district court in Kentucky. The applicant was required to demonstrate that (1) the agency “reported inaccurate information”; (2) it “negligently or willfully failed to follow reasonable procedures to ensure maximum possible accuracy of his information”; (3) “he was injured”; and (4) the agency’s report “was the proximate cause of his injury.” Here, the court determined that the agency’s procedures were reasonable as a matter of law, and it was not unreasonable to rely on erroneous information provided by a court clerk (Harbaugh v. The Applicant Screening Company of America, Inc., No. 5:24-178-DCR (E.D. Ky. Nov. 14, 2025)).

Criminal background check. In 2023, the applicant applied for a facilities maintenance position at Vallco Management Services. He consented to the criminal background check portion of the application. Vallco then contracted with APSCREEN to provide a criminal background check. APSCREEN offers pre-employment background screening services to companies. It either conducts the investigation itself or uses third-party vendors.

When an initial criminal history database search reveals that the applicant’s name is implicated in a criminal case, APSCREEN seeks clarification and specifics directly from the respective court either on its own or through its third-party vendors.

The Vallco application also required the applicant to fill out a criminal history disclosure indicating whether he had “been convicted of a felony or misdemeanor anywhere other than a minor traffic violation,” and whether he was “out on bail, awaiting trial and/or [had] any outstanding warrants pending against” him. The applicant answered “no” to both inquiries and certified their accuracy.

Criminal records. APSCREEN’s initial database search identified potential criminal records for the applicant in Kentucky and California. It then contracted with Baxter Research to obtain more information regarding the applicant’s criminal records in Merced County, California. The contract provided that Baxter was free to pay any court fees it incurred; however, if it wanted APSCREEN to cover the fee, it was first required to seek APSCREEN’s written approval.

COVID pandemic disruption. During the COVID-19 pandemic, the Merced Superior Court closed its public research terminals. As a result, researchers had to obtain desired information directly from the court clerks. Despite this modification regarding how information was previously garnered, APSCREEN did not alter its research process.

Felony conviction error. A Baxter researcher went to Merced Superior Court to inquire about the applicant’s criminal records. The clerk relayed that he was charged for a misdemeanor of resisting or obstructing a public officer; a felony theft and unlawful taking or driving of a vehicle, and a felony for the purchase or receipt of a vehicle obtained by theft or extortion. The clerk verbally reported that Counts 1 and 3 were dismissed when, in fact, Counts 2 and 3 were dismissed, meaning that the applicant had a misdemeanor conviction for resisting or obstructing a public officer; however, he did not have a felony theft conviction.

The Baxter researcher did not personally review the applicant’s criminal records or seek additional verbal confirmation from the clerk concerning which count(s) were dismissed. Further, the researcher did not request printed records from the clerk at Baxter’s cost, nor did Baxter seek written permission from APSCREEN to cover such costs. Ultimately, Baxter reported to APSCREEN the inaccurate information it received from the clerk.

APSCREEN compiled Baxter’s finding of the felony from Merced County, California, with its other research revealing at least three other misdemeanor convictions and submitted its report to Vallco.

Before receiving APSCREEN’s report, the applicant explained to Vallco’s hiring manager that he had a “couple misdemeanors before [he] joined the Marine Corps and turned [his] life around.”

On October 5, 2023, APSCREEN provided Vallco with the applicant’s criminal history report. Vallco notified the applicant that due to the contents in his background reports, it would not be able to continue with the hiring process.

Immediately after the applicant alerted APSCREEN of the discrepancy, APSCREEN notified Vallco it was reinvestigating the matter. As part of that subsequent investigation, the Merced Superior Court corrected its original representation, noting that the clerk had made an error and that the applicant did not have a felony conviction. APSCREEN then provided Vallco a corrected report which reflected that the applicant was felony-free. But by that time, the position had been filled.

FCRA claim. The applicant filed a lawsuit alleging APSCREEN violated the FCRA, 15 U.S.C. § 1681, by failing to use “reasonable procedures to assure the maximum accuracy possible” in creating his report that was disseminated to Vallco. APSCREEN argued that, despite the inaccurate record, it used reasonable procedures and that the FCRA does not demand strict liability. In response, the applicant argued that APSCREEN had alternative reasonable procedures available that would have assured the maximum possible accuracy but declined to implement those procedures.

According to the applicant, APSCREEN violated 15 U.S.C. § 1681e(b) because it “failed to follow reasonable procedures to ensure the maximum possible accuracy of the information it attributed to [him] in its consumer reports.” However, the court noted that “liability does not flow automatically from the fact that a consumer reporting agency, such as defendant, reports inaccurate information.” Instead, the applicant must demonstrate that (1) APSCREEN “reported inaccurate information”; (2) APSCREEN “negligently or willfully failed to follow reasonable procedures to ensure maximum possible accuracy of his information”; (3) “he was injured”; and (4) APSCREEN’s report “was the proximate cause of his injury.” The parties agreed that APSCREEN reported inaccurate information, but they disagreed about whether the remaining elements were met.

Reasonable procedures. APSCREEN has been providing pre-employment screening services for 45 years. Before this lawsuit, it “had never received any complaints about the accuracy of any information included in its reports.” Its procedures in generating a report are as follows: (1) it conducts a preliminary criminal history search on the applicant; (2) if that search returns criminal records, it dispatches someone to the relevant court to conduct onsite research; (3) if the court is located too far from APSCREEN’s office, it contracts with vetted third-party vendors to conduct the research. While some courts have public terminals where researchers can review court documents themselves, others require that the information comes directly from the clerk.

Here, because the Merced Superior Court was out of its area, APSCREEN relied on Baxter as it had done for more than 18 years without any reliability or accuracy issues with its research before this incident. The Baxter researcher received the erroneous information verbally from a clerk. Baxter reported back to APSCREEN that the applicant had been convicted of felony theft, which APSCREEN incorporated into its own findings regarding his other misdemeanor convictions.

There was no evidence that APSCREEN was on notice that it should not rely on Baxter’s research. There was also no dispute that APSCREEN’s report accurately relayed the information provided by the clerk. And once APSCREEN was notified of the potential error, it promptly notified Vallco that it was reinvestigating its report before researching and correcting the error.

The court determined that the applicant’s contention that additional procedures could have been in place that would have prevented the error was unavailing. While it is true that APSCREEN could have required that all criminal records be purchased in print form at its expense or that third-party researchers be required to verbally confirm each conviction with the clerk, that does not mean its existing procedures were unreasonable.

The FCRA does not impose strict liability for reporting inaccurate information. Instead, the standard for a reasonable procedure to assure the maximum accuracy possible considers “what a reasonably prudent person would do under the circumstances.” Here, once alerted to potential criminal cases, APSCREEN sought additional information directly from the court.

Accordingly, the agency was granted its motion for summary judgment.

The case is No. 5:24-178-DCR.

Judge: Reeves, D.

Attorneys: Yitzchak Zelman (Marcus & Zelman) for Michael Harbaugh. Shannon Antle Hamilton (Stites & Harbison) for The Applicant Screening Co. of America, Inc.

Companies: The Applicant Screening Company of America, Inc.

Cases: Privacy Procedure Covid19 KentuckyNews