Controversial Background Check Startup, Checkr, Worth $2.2 Billion

As the gig economy has grown, startup background check company, Checkr, who is most notably responsible for background checks on Uber and Lyft drivers, has exploded as well. And while ridesharing helped the San Francisco-based Checkr to get established, companies like Adecco, Thumbtack, Hot Topic, DoorDash, and Warby Parker are now processing background checks through Checkr, which has completed over 42 million reviews of potential employees.

In September 2019, Checkr announced that it has raised an additional $160 million in venture funding from investors T. Rowe Price, Mary Meeker’s Bond Capital, and Coatue Management, which doubles the startups value to $2.2 billion, which will help the company expand beyond the U.S. and Canada and into the international market.

Checkr was founded five years ago by two Forbes 30 Under 30 alums, Jonathon Perichon and Daniel Yanisse, who when working at another startup Deliv, saw the need for better, quicker, more automated background checks for employees. While Checkr has made the background check process more convenient for employers, it has not been without controversy. 

Background reports from Checkr have not only been inaccurate, causing workers to lose job opportunities or lose jobs, but frequent reports of violence, rape, and robbery from rideshare and delivery drivers that have passed Checkr’s background checks have made headlines.

How Checkr Background Checks Are Run 

Traditional background checks are fingerprint-based and run against FBI and law enforcement databases. This method of running a background check is time-consuming, but leaves very little room for errors, unlike Checkr’s methods which are the fastest in the industry, but entirely based on a social security number and name run through public records such as county court records and the national sex offender registry, which are notorious for being inaccurate.

This process has not only allowed those convicted of serious crimes into positions that put the general public at-risk, but it has also prevented honest, hardworking citizens from acquiring jobs or has resulted in these workers being fired due to inaccuracies in their reports, according to recent lawsuits. 

Checkr founders have acknowledged the accuracy errors and states that they have a fair process for disputing and appealing errors. Also, its founders have created a separate website, Better Future, for people to perform their own background checks and flag any errors that are presented. Unfortunately, for potential employees, this error resolution process has not always been successful or easy. 

Checkr Legal Troubles 

Legal issues regarding the misinformation of its background checks have continued to plague Checkr. In 2014, district attorneys in San Francisco and Los Angeles sued Uber over its Checkr-run background checks, alleging the company hired drivers who were convicted of murder, kidnapping, and assault with a firearm, which was subsequently settled for $10 million. When Massachusetts required state-run background checks for Uber and Lyft in place of Checkr, 8,200 drivers failed the new screenings, approximately 1,000 of these drivers losing their jobs due to convictions for violent crimes and 51 who were registered sex offenders. 

More than 40 people have sued the company for violating the Fair Credit Reporting Act (FCRA) and in December of 2018, Checker settled a class-action lawsuit that alleged illegal information regarding low-level offenses were included on the reports of 96,000 people, which paid out $4.46 million in damages and attorney fees.

In a suit filed in September 2019, a San Antonio woman claims her Checkr report found 19 criminal charges which were completely false, causing Uber, UberEats, Lyft, and DoorDash to reject her applications. When the woman contacted Checkr, she was allegedly told that her report was true, and the company refused to make any corrections.

Recently, a Maryland resident, who was driving for Uber for two years, and had an annual “Continuous Check” report run on him, was suspended from the rideshare company when his background report erroneously linked him to crimes committed in Ohio. After disputing the report, Checkr corrected it and the driver was reinstated. When Continuous Check was run on his background a second time, the driver was again suspended for the same errors that were supposedly corrected, according to court records. 

And these are just a small sampling of the cases against Checkr and the companies that use their services. Dozens of lawsuits have been filed against Checkr since 2014 and this number is sure to grow as the background check company continues to provide erroneous information.

Your Rights Under the FCRA

If you had a background check run through Checkr for potential employment and you were denied the position due to an inaccurate report, or Checkr refused to fix incorrect information, you do have rights under the FCRA. The FCRA allows for consumers to dispute errors, have mistakes removed, and to not have outdated information older than seven years (10 years for bankruptcies) listed on a report. If a company such as Checkr violates these requirements, consumers have the right under the FCRA to sue for damages. 

If you have a problem with Checkr regarding your background check, you may be entitled to money damages, up to $1,000.00, plus actual damages, and we’ll get Checkr to fix the error. The FCRA also has a fee-shift provision, which means the credit reporting agency will pay your attorney’s fees and costs. You won’t owe us a dime for our services. We have helped hundreds of consumers fix inaccurate information on their credit reports, and we’re ready to help you, too.

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Submitted Complaints

I was denied by two gig companies, DoorDash & Grubhub background checks