Indian-origin founders’ AI recruitment startup Eightfold faces US lawsuit over ‘secret’ job scoring

Eightfold AI, an artificial intelligence recruitment platform based in Silicon Valley and supported by investors like SoftBank Vision Fund and General Catalyst, is facing a proposed class-action lawsuit. This legal action claims that the company has been secretly scoring job applicants without their knowledge, raising potential violations of US consumer protection laws. The lawsuit, initiated on January 21 in California, involves job seekers Erin Kistler and Sruti Bhaumik. They allege that Eightfold generates detailed talent profiles that include personality assessments and 'fit scores,' which are categorized as consumer reports under the Fair Credit Reporting Act (FCRA). The plaintiffs argue that because Eightfold allegedly does not inform candidates or provide access to these profiles, job seekers are stripped of their rights to contest inaccuracies that could detrimentally impact their job prospects. As outlined by the FCRA, companies that produce consumer reports for employment purposes are mandated to notify individuals and allow them the opportunity to review and challenge any discrepancies. According to a report from Reuters, the claimants contend that Eightfold’s evaluations significantly influence hiring outcomes at major employers, positioning the company similarly to a credit reporting agency but without the regulatory obligations that accompany that designation. Co-founded by Ashutosh Garg and Varun Kacholia, both graduates of the Indian Institute of Technology, Eightfold has established a strong operational presence in India. Garg, who serves as CEO, has previously worked in research roles at Google and IBM, while Kacholia was an engineering director at Facebook before co-founding Eightfold in 2016. The company’s Global Centre of Excellence in Noida plays a critical role in product development and operations. Among its clients are numerous Fortune 500 companies, including Microsoft and PayPal. Eightfold promotes its platform as a means for employers to streamline their hiring processes by analyzing extensive datasets from resumes and job postings to better predict candidate suitability. A spokesperson for Eightfold, Kurt Foeller, stated that the company operates transparently and does not engage in covert methods like scraping social media. Foeller emphasized that they are committed to responsible AI practices and full compliance with relevant data protection and employment laws. This lawsuit arrives at a time when regulators and consumer advocates are increasingly focused on adapting traditional consumer protection laws to address the complexities of AI-driven decision-making systems, particularly in hiring, lending, and housing—areas where algorithmic bias and opaque scoring processes have come under intense scrutiny. As of now, Eightfold has not submitted a formal response to the court regarding the lawsuit.