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

Eightfold AI, a Silicon Valley-based artificial intelligence (AI) recruitment platform backed by SoftBank Vision Fund and General Catalyst, has been hit with a proposed class-action lawsuit alleging it secretly scores job candidates without their knowledge, potentially violating US consumer protection laws.

The case, filed on January 21 in California, was brought by job seekers Erin Kistler and Sruti Bhaumik, who claim Eightfold compiles detailed talent profiles, including personality descriptions and “fit scores” that function as consumer reports under the Fair Credit Reporting Act (FCRA).

The lawsuit argues that because Eightfold allegedly operates without notifying candidates or giving them access to their profiles, job seekers are denied the right to dispute errors that could affect their employment prospects.

Under the FCRA, companies that provide consumer reports for employment purposes are required to notify individuals and allow them to review and challenge any inaccuracies.

According to a Reuters report, the claimants allege that Eightfold’s assessments influence hiring decisions at large employers, effectively placing the company in the role of a credit reporting agency, but without the regulatory obligations that status carries.

Eightfold is co-founded by Ashutosh Garg and Varun Kacholia, both alumni of the Indian Institute of Technology. Garg, the company’s chief executive officer, previously held research roles at Google and IBM, while Kacholia, the chief technology officer, was engineering director for Facebook’s News Feed before launching Eightfold in 2016.

The company maintains a substantial presence in India, with its Noida-based Global Centre of Excellence serving as a major hub for product development and operations. Eightfold’s India clientele includes a TCS partnership in 2021, and a collaboration with Wipro in 2024.

Eightfold counts several Fortune 500 companies among its customers, including Microsoft and PayPal, and markets its platform as a way for employers to automate hiring by analysing large volumes of data from resumes and job listings to predict candidate suitability.

An Eightfold spokesperson said the company does not operate covertly.

“We do not scrape social media and the like. We are deeply committed to responsible AI, transparency, and compliance with applicable data protection and employment laws,” spokesperson Kurt Foeller said, according to Reuters.

He added that the platform operates on data shared by candidates or provided by customers.
The lawsuit comes as regulators and consumer advocates increasingly seek to apply traditional consumer protection frameworks to modern AI-driven decision systems, particularly in areas such as hiring, lending and housing where algorithmic bias and opaque scoring models have drawn growing scrutiny.

Eightfold has not yet filed a formal response in court.