AI Hiring Tools and Consumer Reports: Understanding the Eightfold Litigation

On January 20, 2026, two job applicants filed a class action lawsuit against Eightfold AI Inc. (“Eightfold”) alleging that Eightfold, an AI-driven hiring platform used by major employers, violated the Fair Credit Reporting Act (“FCRA”) and California’s Investigative Consumer Reporting Agencies Act (“ICRAA”) by secretly generating AI-driven applicant “likelihood of success” scores based on a 0-5 scale and dossiers functions as illegal, undisclosed consumer reports.

More specifically, the lawsuit, which is pending in California’s Superior Court for the County of Contra Costa, alleges that Eightfold violated the FCRA by failing to meet the certification, notification, disclosure, authorization, and dispute requirements and invading job applicants’ privacy by failing to take reasonable steps to safeguard reports. Plaintiffs also allege that Eightfold violated the ICRAA by failing to satisfy the consent and certification requirements and invading job applicants’ privacy by not ensuring that the reports were used for permissible purposes. In support of their claims, plaintiffs allege there was insufficient human oversight in monitoring the AI used to generate the reports, claiming that “[l]ower-ranked candidates are often discarded before a human being ever looks at their application” while applicants who received higher-ranked scores are further reviewed by employers.

Further, the complaint alleges that: (1) by assembling and evaluating personal data to generate hiring-related reports, Eightfold is essentially a Credit Reporting Agency; (2) the AI generated scores are “credit reports”; (3) Eightfold is scraping person data from third-party sources that is inaccurate or incomplete; and (4) the scores rating a candidate’s likelihood of success create inferences about personality, behavior, aptitude, intelligence, and other characteristics.

It will be interesting to see how the court resolves whether crediting reporting statutes apply to AI-based employment decision tools given the claims, potentially considering whether these AI tools may fall within the FCRA’s exemption for information “solely as to transactions or experiences between the consumer and the person making the report.” Further, the court may need to resolve that the AI vendor may not qualify as “consumer reporting agencies” because it arguably does not assemble or evaluate information “for the purpose of providing consumer reports to third parties,” as required by the statute.

If Plaintiffs are successful in establishing that AI-generated reports can constitute consumer reports, employers may face increased scrutiny on their implementation of AI tools used to make employment decisions. Further, employers should be aware of the potential liability when engaging with AI-based recruiting tools—even if these tools are developed by third-parties.