Care.com, Inc. (CRCM) Accused of Failing to Vet Caregivers

According to the complaint against the company for alleged violations of the Securities and Exchange Act of 1934 between March 27, 2015 and April 1, 2019, Care.com, Inc. (CRCM) falsely assured investors of its effective and proactive screening of members against various databases for criminal or other inappropriate activity. On March 8, 2019, the truth about Care.com’s ineffective screening practices began to emerge when the Wall Street Journal published an article titled “Care.com Puts Onus on Families to Check Caregivers’ Backgrounds – With Sometimes Tragic Outcomes.” The article described how caregivers in the U.S. “who had police records were listed on Care.com and later were accused of committing crimes while caring for customers’ children or elderly relatives…”

These alleged crimes included theft, child abuse, sexual assault, and murder. On this news, Care.com’s stock fell nearly 13% to close at $20.48 per share on March 11, 2019. Later that month, the Wall Street Journal reported that “hundreds of daycare centers” listed as “state licensed” on the Care.com website did not appear to be, and that tens of thousands of unverified day-care center listings were scrubbed from the Care.com website just before the March 8, 2019 article was published. When the truth was revealed, Care.com’s stock fell over 5% to close at $18.45 per share on April 1, 2019, and has continued to fall.