A Background Check Error Cost Me a Job. Do I Have a Legal Claim?

If you lost a job, a promotion, or an apartment because of inaccurate information on a background check, you may have a legal claim under the Fair Credit Reporting Act (FCRA). Background check companies are consumer reporting agencies under federal law, subject to the same accuracy and investigation requirements as the major credit bureaus. When they report wrong criminal records, misattributed charges, or outdated information, and when employers skip the required notice procedures, both the background check company and the employer may be liable for the harm they cause.

How Background Check Errors Happen

Background check companies compile reports by searching court records, criminal databases, and other public records. The problem is that these searches are often imprecise. Common errors include:

• Wrong-person matches: Records belonging to someone with a similar name or date of birth are attributed to you. This is sometimes called a "mixed file" and is one of the most frequent background check errors.
• Expunged or sealed records: Records that a court has ordered expunged, sealed, or pardoned continue to appear because the background check company pulls from databases that have not been updated.
• Outdated arrests: Under 15 U.S.C. § 1681c, background check companies generally cannot report arrests that did not result in convictions if they are more than seven years old. Despite this prohibition, outdated arrests frequently appear on reports.
• Missing dispositions: A report shows an arrest but fails to include the outcome, such as a dismissal, acquittal, or dropped charges. Without the disposition, the report creates a misleading impression.
• Incorrect charge levels: A misdemeanor is reported as a felony, or the wrong offense is listed entirely.

The Adverse Action Process: What Your Employer Was Required to Do

Before an employer can deny you a job, rescind an offer, or terminate your employment based on a background check, the FCRA requires a specific two-step process. Skipping either step is a federal violation, regardless of whether the background check was accurate.

Step 1: Pre-adverse action notice. Before making a final decision, the employer must provide you with a copy of the background check report, a written summary of your FCRA rights, and a clear statement that they are considering taking adverse action based on the report. This is required under 15 U.S.C. § 1681b(b)(3)(A).

Step 2: Reasonable time to dispute. After sending the pre-adverse action notice, the employer must give you a reasonable amount of time, typically five business days, to review the report and dispute any inaccurate information before making a final decision.

Step 3: Final adverse action notice. Only after the waiting period can the employer send a final adverse action notice. This notice must include the name and contact information of the background check company, a statement that the company did not make the employment decision, and notice of your right to obtain a free copy of the report and to dispute its accuracy. This is required under 15 U.S.C. § 1681m(a).

Many employers skip some or all of these steps. Some never provide the pre-adverse action notice. Others send both notices simultaneously, denying you the opportunity to dispute errors before the decision is final. Each of these procedural failures may be an independent FCRA violation.

Two Separate Claims: The Company and the Employer

A background check error case can involve two distinct types of claims:

• Against the background check company: If the company reported inaccurate information and failed to follow reasonable procedures to ensure the maximum possible accuracy of your report under 15 U.S.C. § 1681e(b), or if it failed to conduct a reasonable reinvestigation after you disputed the error under 15 U.S.C. § 1681i, you may have a claim against the company itself.
• Against the employer: If the employer failed to follow the adverse action procedures described above, including failing to provide the required notices or failing to obtain your written consent before ordering the background check under 15 U.S.C. § 1681b(b)(2), you may have a separate claim against the employer.

In many cases, both the background check company and the employer are liable, and claims against both can be pursued simultaneously.

Tenant Screening: The Same Rules Apply

Everything described above applies equally to tenant screening. If a landlord or property management company uses a tenant screening service to evaluate your rental application, the screening company is a consumer reporting agency under the FCRA, and the landlord must follow the same adverse action procedures as an employer. If an inaccurate tenant screening report caused you to be denied housing, you may have claims against both the screening company and the landlord. Our background check errors practice page covers tenant screening claims in detail.

What Damages May Be Available

The FCRA provides two tracks of damages. For willful violations under 15 U.S.C. § 1681n, you may recover:

• Statutory damages of $100 to $1,000 per consumer per action, even without proof of specific financial harm
• Actual damages for lost wages, higher housing costs, emotional distress, and reputational harm
• Punitive damages with no statutory cap
• Attorney's fees and costs

For negligent violations under 15 U.S.C. § 1681o, you may recover actual damages and attorney's fees.

The FCRA's fee-shifting provision means that in most cases, the defendant pays your attorney's fees if you prevail. This is why most consumer protection attorneys handle background check error cases at no out-of-pocket cost to the client.

What to Do If This Happened to You

• Request a copy of the report. Under the FCRA, you are entitled to a free copy of any background check report that was used to deny you employment or housing. Ask the employer or landlord for it, or contact the background check company directly.
• Identify every error. Compare the report against your actual records. Look for wrong names, wrong dates, charges that belong to someone else, expunged records, missing dispositions, and outdated information.
• Check whether the employer followed the adverse action process. Did they give you a copy of the report before making a final decision? Did they give you time to dispute? Did they send a final adverse action notice? If they skipped any step, that may be an independent violation.
• Dispute the errors in writing. Send a written dispute directly to the background check company. Include copies of any documents that prove the information is wrong (court records showing expungement, documentation showing the record belongs to someone else, etc.). The company must investigate within 30 days.
• Document the harm. Save the rejection letter, any communications from the employer, evidence of the job or apartment you lost, and any financial impact (lost wages, higher rent elsewhere, relocation costs).
• Consult an attorney. Background check error cases involve both the accuracy of the report and the employer's procedural compliance. A consumer protection attorney can evaluate both angles and determine the strongest path forward.

At Rausa Russo Law, we represent consumers who have been harmed by inaccurate background check reports. We handle claims against both background check companies and employers who fail to follow the required FCRA procedures. The consultation is free, and for most consumer protection cases, there is no out-of-pocket cost to you.