Uber Back in the Headlines with FCRA Class Action for Background Checks

Angela Preston


Uber can’t seem to get it right. First, the company was criticized for NOT doing background checks, and now it’s under attack for doing them the wrong way. The national ride sharing service that everyone loves to hate is back in the headlines (although I’m not sure they ever left) facing a class action lawsuit for alleged violations of the Fair Credit Reporting Act (FCRA). The case, Mohamed v. Uber Technologies Inc et al.[1] asserts that Uber violated the FCRA by failing to provide Mohamed and other drivers with a copy of their background check (as required). This case is just one more instance in a parade of many questioning the company’s practices.

Uber in the Headlines

Uber has been fighting bad press since its inception. In October of this year, it got an “F” grade from the Better Business Bureau.  The company and its founders seem to have a knack for attracting controversy. In recent weeks, Uber has been accused of unfair competition for its methods of recruiting its competitor’s drivers. The company has taxi cab authorities and other regulated transportation service companies in an uproar. And its privacy policies have been under attack, with critics alleging that the company is compiling personal user data.

Blogger Sarah Lacy, the editor of the Silicon Valley website PandoDaily, accused Uber of sexism and misogyny in a recent post, creating a firestorm. Uber exec Emir Michael responded to her criticism by making an interesting suggestion—that the company should finance a smear campaign to dig up dirt on journalists like Lacy. Not surprisingly, this idea created yet another scandal when blog site Buzzfeed exposed his plan and journalists everywhere cried foul. Now Uber investor Ashton Kutcher has gotten in on the act.  His response to the scandal via twitter was this: “What is so wrong about digging up dirt on shady journalist? @pando @TechCrunch @uber.” Hmm. No comment.

Background Checks at Uber

One Uber issue that has raised some hackles (including mine) is the issue of background checks. The company has waffled on its approach to screening drivers, but after countless complaints of driver misconduct and horror stories, it stepped up its screening program in February of 2014.  On the heels of a fatal tragedy involving an Uber driver with a criminal past, the company announced that it was upgrading its background screening policies.

Prior to the change in February, Uber had not been personally running checks on its black car drivers, but was reportedly relying on its transportation partners to do checks. UberX (the company service that uses independent drivers) was relying on a multijurisdictional database search run by a third party company. Information was not updated at the source, courthouse records were not searched, and the number of years and quality of information covered by the search was limited to what was in the database on any given day.  For the record, a database search alone is never sufficient to constitute a reliable background check.

The good news is that Uber’s current policy, as described on its blog, appears to be a good one:

“All Uber ridesharing and livery partners must go through a rigorous background check that leads the industry. The three-step screening we’ve developed across the United States, which includes county, federal and multi-state checks, has set a new standard. These checks go back 7 years, the maximum allowable by the Fair Credit Reporting Act. We apply this comprehensive and new industry standard consistently across all Uber products, including uberX.”

The policy, as described, follows best practices and sets a high bar for drivers. So far, so good.

Uber Hit with FCRA Class Action

On November 24, the company was hit with the class action case mentioned above. Mohamed, the named plaintiff, was an Uber Black driver who wanted to become an uberX driver. According to the complaint, Mohamed purchased a car and was actually working as an X driver when he got notice from Uber’s parent company that it rejected his proposal to work as an UberX contractor. The notice said that the decision was, in part, due to information obtained in the consumer report (more commonly referred to as a background check).

Mohamed filed the class action soon after, claiming that Uber didn’t provide him with proper pre-adverse action notice and didn’t include a copy of the background check report as required by the FCRA, California law, and Massachusetts law. If this sounds familiar, it should. We have seen dozens of these cases over the past year.

Adverse action is a two-step process, and the first step requires that the prospective employer provide notice to the applicant as well as a copy of the background check.  If Uber missed the first step, it could be liable for every driver it has rejected since it began running background checks with a third party provider (consumer reporting agency).

Mohamed claims that he only received notice AFTER the final decision to reject him was already made. At that point, it is too late for the applicant to question the accuracy of the report and contact the background company for reinvestigation.

The complaint makes another claim that is, by now, also very familiar to readers of this blog. Mohamed alleges that Uber did not provide the required disclosure for a background check required by the FCRA and state law. Specifically, Mohamed relies on the requirement stating that it must be a document consisting solely of the disclosure. Both of these claims alleged to be willful, opening the door for statutory damages and attorney’s fees.

Other claims are made alleging that the background screening company violated specific requirements under state law. It is possible, however, that those claims would not have risen to the surface without the alleged FCRA violations. It is impossible to predict any outcomes until the facts are sorted out and the defendants have a chance to respond. But meanwhile, this case only fuels the fire for Uber detractors.

All of this controversy surrounding Uber makes for interesting debate and juicy blog posts. Even those who criticize Uber seem to like the service it provides. But there is a serious issue here. What troubles some people (including me) about Uber’s business model and ethos is the lingering impression that it thinks it’s above the law. Is it more concerned with profitability or safety? In reality, Uber might simply be in a grey area of law that still needs to be sorted out. In the long run, I hope it proves the critics wrong.

[1] No. 3:14-cv-05200, N. D.C., California (2014)

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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  • Angela Preston

    Things have gotten even worse for Uber since this story was published. Earlier this week, the New York Times reported that Uber was banned in New Delhi after a driver was accused of raping a customer; New Delhi authorities said the driver, who was previously accused of raping another female passenger in 2011, was not properly vetted by Uber.

    In other emerging stories, the New York Times and the Wall Street Journal both criticized Uber for its background policies in the states, and its lobbying efforts to quash bills that would subject it to state regulation. The stories raise some interesting questions about background checks, and unfortunately perpetuate some myths about fingerprinting. Look for more updates to come, as we dispel the myth that a fingerprint is the best option and explain why name based checks are more thorough and are the best practice.

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