Can You Sue for an Incorrect Background Check? Your FCRA Lawsuit Rights

If a background check company reported inaccurate information about you — and you lost a job, were denied housing, or suffered other harm — you may have grounds to sue under the Fair Credit Reporting Act (FCRA). The FCRA (15 U.S.C. § 1681 et seq.) holds consumer reporting agencies legally accountable for errors in the reports they produce, and it provides real financial remedies for consumers who are harmed by those errors.

Background check lawsuits require no upfront cost to the consumer. The FCRA requires the background check company to pay your attorney’s fees if you win (15 U.S.C. § 1681n(a)(3)), which means you can pursue your case without paying out of pocket.

Background check errors are not rare. The Consumer Financial Protection Bureau (CFPB) received approximately 1.3 million credit and consumer reporting complaints in 2023 — a 34% increase over 2022 — with “incorrect information on a report” as the single most common complaint category. In an industry that generates over $5 billion in annual revenue, the sheer volume of background checks processed daily makes errors inevitable — but the FCRA ensures those errors have legal consequences.

When a Background Check Error Becomes a Lawsuit

Not every background check error requires a lawsuit. In many cases, filing a dispute directly with the background check company resolves the problem. But when a company ignores your dispute, fails to investigate within the legally required 30 days, or continues to report the same inaccurate information after being notified, that failure may constitute an FCRA violation — and an FCRA violation is the basis for a lawsuit.

You may have grounds to sue a background check company if:

• They reported someone else’s criminal record on your report (known as a “mixed file”) because they used sloppy name-matching procedures instead of verifying identity through Social Security numbers, dates of birth, and other identifiers. In Williams v. First Advantage, a court awarded $250,000 in compensatory damages and $1 million in punitive damages to a single individual whose background check twice included criminal records belonging to a different person with a similar name.
• They used name-only matching to identify you. In January 2024, the CFPB issued an advisory opinion confirming that matching criminal records to consumers using only first and last name — without verifying Social Security number, date of birth, or address — does not satisfy the FCRA’s requirement to follow “reasonable procedures to assure maximum possible accuracy” under 15 U.S.C. § 1681e(b).
• They reported expunged, sealed, or dismissed charges that should not appear on a background check under state or federal law.
• They reported records without current disposition information. The CFPB confirmed in its 2024 advisory opinion that background screening reports must include existing disposition information for arrests, criminal charges, and court filings. A report that shows an arrest without noting the charge was dismissed or resolved in your favor violates the FCRA’s accuracy requirements.
• They misclassified a misdemeanor as a felony — a common error that can disqualify you from employment even when your actual record would not.
• They reported criminal records beyond the legal reporting period. Under federal FCRA, arrests older than 7 years cannot be reported regardless of salary (15 U.S.C. § 1681c(a)(2)). Under Texas law (Business & Commerce Code Chapter 20), criminal convictions older than 7 years generally cannot be reported for positions paying $75,000 or less per year.
• They failed to investigate your dispute within 30 days as required by 15 U.S.C. § 1681i, or they conducted a superficial investigation without actually verifying the disputed information.
• They continued reporting the same error after you disputed it, demonstrating a willful disregard for accuracy.
• Your employer failed to follow proper adverse action procedures — under 15 U.S.C. § 1681b(b)(3), employers must give you a copy of the report and a summary of your FCRA rights before taking action against you based on a background check.

What Damages Can You Recover in a Background Check Lawsuit?

The FCRA provides two categories of damages depending on whether the violation was willful or negligent.

Willful Violations (15 U.S.C. § 1681n)

If the background check company knowingly or recklessly violated the FCRA, you can recover:

• Statutory damages of $100 to $1,000 per violation — even if you cannot prove a specific dollar amount of harm.
• Punitive damages — additional money awarded to punish the company for its conduct. In Miller v. Equifax, a jury awarded $18.4 million in punitive damages after Equifax merged one consumer’s file with a different person who had the same name. The judge reduced the award to $1.62 million, but even after reduction, the total exceeded $1.8 million for a single plaintiff.
• Attorney’s fees and court costs — paid by the defendant, not you.

Negligent Violations (15 U.S.C. § 1681o)

If the company was careless but not intentionally reckless, you can recover:

• Actual damages — including lost wages from a job you didn’t get, denied housing costs, out-of-pocket expenses, and compensation for emotional distress.
• Attorney’s fees and court costs.

Background Check Companies Have Paid Millions in FCRA Penalties

These are not hypothetical damages. Federal regulators, juries, and courts have imposed substantial penalties on background check companies that violated the FCRA:

• Sterling Infosystems: The CFPB ordered Sterling to pay $6 million in consumer relief plus a $2.5 million civil penalty for inaccurate employment background reports. A separate class action settlement added $15 million.
• General Information Services (GIS) and e-Backgroundchecks.com: The CFPB ordered $10.5 million in consumer relief plus a $2.5 million civil penalty after finding the companies failed to use basic identity matching procedures — they did not even require employers to provide consumers’ middle names.
• HireRight Solutions: The FTC imposed a $2.6 million civil penalty — the first time the agency charged an employment background screening firm with FCRA violations.
• Equifax (January 2025): The CFPB imposed a $15 million civil penalty for systematic failures in dispute handling and accuracy procedures.
• Robert Half International (2025): Agreed to a $4.38 million settlement for FCRA violations related to background check practices used on job applicants.
• TransUnion (Ramirez class action): A federal jury awarded a class of 8,185 consumers $60 million — $8 million in statutory damages and $52 million in punitive damages — after TransUnion linked ordinary consumers to names on a government watchlist without proper verification.

These enforcement actions and verdicts confirm what FCRA attorneys see in practice: background check companies routinely cut corners on accuracy, and the law provides real financial consequences when they do.

Individual Lawsuits vs. Class Actions

Most background check lawsuits are filed as individual cases, where one consumer sues the background check company for the specific errors on their report. Individual lawsuits allow you to tell your full story and pursue the maximum damages for your situation. In Williams v. First Advantage, a single plaintiff recovered $1.25 million for a mixed-file error.

However, when a background check company commits the same type of FCRA violation against many consumers — for example, a systematic failure to follow reasonable matching procedures that causes mixed files for hundreds of people — a class action lawsuit may be appropriate. Class actions hold companies accountable for widespread practices, not just individual errors.

The FCRA Lawsuit Timeline: What to Expect

Understanding the timeline helps set realistic expectations:

1. Statute of limitations: You must file within 2 years of discovering the violation or 5 years after the violation occurred, whichever comes first (15 U.S.C. § 1681p). Do not wait — if you know your background check contains errors, act now.
2. Pre-suit dispute: While not always legally required, disputing the error in writing before filing suit strengthens your case by documenting that the company had notice of the error and failed to fix it.
3. Filing in federal court: FCRA cases are filed in federal district court. Your attorney handles all filings, discovery, and court proceedings.
4. Discovery and negotiation: Most background check cases settle before trial once the company’s internal records reveal the extent of their failures.
5. Resolution: Cases typically resolve within 6 to 18 months, depending on complexity and whether the company is willing to settle.

Why FCRA Background Check Cases Cost You Nothing Upfront

At Clanton Law Office, we handle background check cases on a contingency basis — you pay nothing upfront, and you owe nothing unless we recover money for you. With over 15 years of experience in consumer law, we have never accepted money from a client to file a case against a background check company, and you will not be the first. 

The FCRA also includes a fee-shifting provision (15 U.S.C. § 1681n(a)(3) and § 1681o(a)(2)) that allows the court to order the background check company to pay attorney’s fees. Congress included this provision because it recognized that most consumers cannot afford to sue large corporations on their own — and it wanted to ensure that FCRA violations don’t go unchallenged simply because of cost.

We won’t charge and you should never pay an attorney to handle your background check lawsuit.

Frequently Asked Questions About Background Check Lawsuits

Can I sue a background check company for reporting wrong information?

Yes. Under the FCRA, consumer reporting agencies must follow reasonable procedures to ensure maximum possible accuracy (15 U.S.C. § 1681e(b)). If a background check company reports inaccurate information — such as someone else’s criminal record, expunged charges, or misclassified offenses — and you suffer harm as a result, you can file a lawsuit to recover damages. Your case is strongest if you first disputed the error and the company failed to correct it.

How much can I recover in a background check lawsuit?

For willful FCRA violations, you can recover statutory damages of $100 to $1,000 per violation plus punitive damages and attorney’s fees (15 U.S.C. § 1681n). For negligent violations, you can recover actual damages — including lost wages, denied housing costs, and emotional distress — plus attorney’s fees (15 U.S.C. § 1681o). Courts have awarded individual plaintiffs over $1 million in combined compensatory and punitive damages for mixed-file background check errors.

Do I need to dispute the error before I can sue?

Filing a written dispute before suing is not always legally required, but it significantly strengthens your case. A dispute creates a paper trail showing the company was notified of the error and had an opportunity to fix it. If they failed to investigate within 30 days or continued reporting the inaccurate information, that failure becomes strong evidence of an FCRA violation. Important: Do not create an account on the background check company’s website or use their online portal to dispute — many companies bury arbitration clauses in their terms of service that could prevent you from filing a lawsuit.

How long do I have to file a background check lawsuit?

Under 15 U.S.C. § 1681p, you must file within 2 years of discovering the FCRA violation or 5 years after the violation occurred, whichever is earlier. Because these deadlines are strict, it is important to consult with an attorney promptly after discovering an error on your background check.

Will a background check lawsuit cost me anything?

No. The FCRA includes a fee-shifting provision that requires the background check company to pay your attorney’s fees if you prevail (15 U.S.C. § 1681n(a)(3) and § 1681o(a)(2)). At Clanton Law Office, we handle FCRA background check cases on a contingency basis — you pay nothing unless we recover money for you.

Can I sue my employer for using an incorrect background check against me?

Yes, in certain circumstances. The FCRA requires employers to follow specific procedures before taking adverse action based on a background check. Under 15 U.S.C. § 1681b(b)(3), employers must provide you with a copy of the report and a written summary of your FCRA rights before they deny you the job or terminate your employment. If your employer skipped these steps, they may be independently liable under the FCRA — separate from any liability of the background check company itself.

When to Contact an FCRA Attorney

If a background check error has cost you a job, a home, or your reputation — and the company that produced the report has failed to fix it — you may be entitled to compensation under the FCRA. At Clanton Law Office, we have helped thousands of consumers hold background check companies accountable for inaccurate reporting.

You should contact us immediately if:

• A background check contains information that does not belong to you
• You were denied a job or housing based on inaccurate screening results
• A background check company ignored your dispute or failed to correct errors
• Your employer did not provide you with a copy of the report before taking action
• The same errors keep reappearing after you’ve already disputed them

Every consultation is free, and every case we take costs you nothing upfront. The background check company pays our fees — not you. Call (210) 226-0800 or contact us online to discuss your case today.