AI Litigation: Class Action Alleges AI Use in Recruiting Violates FCRA
by
April 28, 2026
This Fox Rothschild blog flags Kistler v. Eightfold AI, a recent class action complaint filed in a California state court. The plaintiffs allege that a recruiting company’s use of a proprietary LLM to score and rank potential job candidates for employers without registering as a consumer reporting agency violated the Fair Credit Reporting Act (FCRA) and California’s Investigative Consumer Reporting Agencies Act (ICRAA).
The blog notes that FCRA applies when an entity qualifies as a “consumer reporting agency” (CRA), when the information it furnishes constitutes a “consumer report”, and the report is used for an “employment purpose.” If these three conditions are met, that triggers a comprehensive set of obligations under the statute that apply to both the CRA and the employer. This excerpt addresses the threshold issue of whether an AI platform can be a CRA:
Under 15 U.S.C. § 1681a(f), a CRA is any person that, for monetary fees, regularly assembles or evaluates consumer information for the purpose of furnishing consumer reports to third parties. The Kistler plaintiffs allege this definition is met because Eightfold contracts with employers for compensation, assembles candidate data from multiple sources (applicant submissions, employer HR systems, and third-party public sources), evaluates that data using its proprietary AI, and furnishes the resulting reports to employer-clients.
The CRA definition is not limited to traditional credit bureaus. Any entity that assembles or evaluates consumer information from external sources and furnishes it to third parties for a statutory purpose can be deemed CRAs. In 2024, the Consumer Financial Protection Bureau (CFPB) issued guidance specifically addressing this point, noting that an entity can “assemble” or “evaluate” consumer information within the meaning of the statute “if the entity collects consumer data in order to train an algorithm that produces scores or other assessments about workers for employers.”
Although the current CFPB leadership has rescinded that guidance, the underlying statutory provisions remain unchanged, and the Kistler lawsuit demonstrates that private plaintiffs are actively pursuing claims on this theory.
The blog also addresses the issue of whether a platform’s output could be regarded as a consumer report, as well as what is necessary for a report to be regarded as being used for “employment purposes” under the statute. It also addresses the applicable standards under the ICRAA, which is California’s broader (of course!) version of the FCRA. It goes on to address the obligations imposed under the FCRA and the ICRAA and offers some practical takeaways for employers and technology and service providers.