In two separate actions filed in federal district courts in Washington and Colorado, the Federal Trade Commission (FTC) alleged that Quality Terminal Services and Rail Terminal Services contracted with a consumer reporting agency to conduct background checks, including criminal histories, on employees and job applicants, and made hiring and firing decisions based on those background checks. The employers allegedly failed to provide the employees and applicants with notices as required by the Fair Credit Reporting Act (FCRA). The parties reached a settlement agreement to resolve the dispute, which requires the employers to pay a total of $77,000 in civil penalties and enjoins future FCRA violations.

Under the FCRA, if an employer takes an adverse action (such as firing or deciding not to hire an applicant) based on information obtained from the background check, then the employer must provide advance notice to the affected individual that some adverse action will be taken (e.g. refusal to hire or termination). In addition, the employer must provide the affected individual with a copy of the report, the contact information for the consumer reporting agency that furnished the report, as well as a statement that the consumer reporting agency did not make the adverse decision. It must also inform the affected individual of his or her right to obtain a free copy of the report from the consumer reporting agency and dispute its accuracy.