Class Action Lawsuit Says Stearns Lending Violated FCRA

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Stearns Lending, LLC is the defendant in a class action lawsuit claiming the mortgage company breached the Fair Credit Reporting Act (FCRA) by routinely failing to make certain disclosures with regard to employees’ background checks in violation of federal law. Filed in California, the lawsuit alleges Stearns Lending failed to provide mandatory pre-authorization and adverse-action disclosures to potential and current employees.

Under the FCRA, a “clear and conspicuous” pre-authorization disclosure must be made to job applicants in a stand-alone document informing the individual that a background report may be procured for employment purposes. Similarly, the FCRA requires employers to provide pre-adverse action disclosures with a copy of the background report before taking action against prospective or current employees based on the results of their reports.

The plaintiff specifically alleges that she was hired by the defendant and, three days after her first day, was terminated because of information contained in her background report. It was disclosed to the plaintiff that her employer would be obtaining a consumer report, but was done so as part of her job application filled with extraneous information, not a stand-alone document as required by the FCRA.