Retailer Dollar General Settles FCRA Class Action for $4M

Angela Preston


This is a great time of year for most retailers. The holidays are just ahead, and consumer confidence is high. That’s the good news. Here’s the bad news: the trend of retailers being hit with FCRA class action cases continues to grow. As a colleague of mine, Scott Paler said recently, you can’t drive down the street in suburban American without noting the businesses in your shopping plaza that have been hit: Home Depot, Aaron’s Furniture, Whole Foods, CVS, Panera, Nine West, A.M.C., and so on.

Dollar General to Pay $4M

Another one of those retailers is about to shell out a multi-million dollar settlement. According to court documents, Dollar General will pay $4 million to settle a two-year old Virginia class action case for missteps in its background screening process. The suit alleges that the retail chain failed to provide proper disclosure forms and authorizations to its job applicants before running a background check, and also failed to follow proper pre-adverse and adverse action procedures.

The settlement agreement was filed by plaintiffs Jonathan Marcum and Jackie E. Lewis, who are represented by consumer rights consortiums including attorney Leonard A. Bennett, whose fingerprints are on many of these cases.  Marcum and Lewis allege that “(a.) they were denied employment with the defendant because of their employment-purposed consumer report; (b.) either the adverse employment decision had been made before the plaintiffs received a copy of their report and summary of rights or the defendant did not provide these in a meaningful and reasonable time before this decision; and (c.) the Summary of Rights form defendant eventually sent was an outdated summary and not the current form required by both the [Consumer Financial Protection Bureau] and the [Federal Trade Commission].”

The original case was filed in February 2012, and was later amended in October 2012 to add that Dollar General “willfully failed to comply with the disclosure and authorization requirements in [the FCRA] prior to obtaining a consumer report about him for employment purposes.” Dollar General has not admitted to any wrongdoing, and denies any liability, but has agreed to settle the case in order to end the on-going litigation.

The Bigger Retail Trend

According to a report from the Society for Human Resource Management (SHRM) published in August, 27 nationwide FCRA class actions for background screening violations have been filed against employers in various industries in 2014. Many of those are retailers, including restaurant chains and theater chains, and 12 of those class actions were filed in June and July of 2013 alone. The settlements have been daunting:

  • First Transit: $5 million.
  • K-Mart: $3 million.
  • Domino’s Pizza: $2.5 million.
  • Swift Transportation Corporation: $4.4 million.

Here are Key Tips to Avoid Joining the FCRA Class Action Club:

  • Review your consent forms. The FCRA requires both a “disclosure” form and an “authorization” form, signed by the applicant. Many of these cases revolve around outdated or incorrect forms. Electronic and paper forms are both o.k.
  • Confirm that the authorization and disclosure form is signed prior to ordering the background check. Provide a mechanism for the applicant to date the form.
  • Consult with legal counsel or a background screening expert on what language can be included on the form. While “authorization” and “disclosure” are two separate requirements under the FCRA, it’s o.k. to combine those two requirements on one form.
  • Don’t include extraneous information, like a disclaimer, release of liability, or acknowledgments on the form.
  • Consider state requirements that may have specific rules for the authorization and disclosure form.
  • Bring together the different stakeholders within your organization to make sure you are getting the background screening process right. The HR department, recruiting, procurement, legal counsel, and information technology departments may all have a stake in this process.
  • Review your adverse action process. If you disqualify a candidate based on the background check, make sure you are sending a pre-adverse action notice BEFORE a decision is made.
  • Make sure you wait 5 business days (minimum) before sending the final adverse action notice.
  • Don’t forget to include a copy of the background check and a Summary of Rights with the pre-adverse action notice.


Angela Preston
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Angela Preston

Vice President of Compliance & General Counsel at EmployeeScreenIQ
Angela Preston has more than 20 years as a licensed attorney and over 10 years in the background screening area. She serves on the Board of Directors of the National Association of Professional Background Screeners (NAPBS), is a member of the NAPBS Background Screening Credentialing Council (BSCC), and is actively involved in the Society for Human Resource Management (SHRM) and ASIS International. Angela is also a member of the Ohio State and Columbus Bar Associations. Angela has direct oversight and management of compliance programs, and will provide guidance in complex legal matters including state and federal legislation, EEO law, client education, adjudication, pre/adverse action process, NAPBS Accreditation and client and vendor contract management.
Angela Preston
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