The Fair Credit Reporting Act (FCRA) is a United States federal law that protects the accuracy and privacy of the information found in consumer reports, such as credit reports and criminal histories. As an employer, you may obtain consumer reports for employment purposes through a third-party background check provider.
The background check provider (known as a “consumer reporting agency” or “CRA”) has a number of responsibilities under the FCRA. A reputable CRA that complies with the FCRA will help you to access the screening information that you need in a manner that’s legal, thorough and fair to the individual who is the subject of a consumer report, such as a job applicant.
Is your background check provider committed to maintaining the highest level of compliance with the FCRA? One way to check is to ask your background check provider how they comply with these 3 key provisions of the FCRA:
1. Abide by Adverse Reporting Guidelines
The FCRA limits the scope of adverse information that a CRA can provide to its customers (e.g., employers). In most cases, the CRA is limited to reporting adverse information for no more than 7 years, although bankruptcies may be reported for 10 years and criminal convictions may be reported indefinitely. Additional state laws may also limit the information that can be reported by a CRA.
In addition to the general reporting restrictions with which a CRA must comply, the FCRA also imposes some specific reporting restrictions on the CRA that may be applicable to certain types of information in the screening report. First, when the information in the screening report contains matters of public record that are likely to have an adverse effect on the applicant/employee’s employment opportunities, the CRA must either:
- Notify the applicant that the information is being reported and give the applicant the name and address of the user (e.g., employer or prospective employer) to whom the report is being provided at the time the public record information is reported to the user, OR
- Maintain strict procedures designed to ensure that such public information is complete and up-to-date. Information is considered up-to-date if it is the current public record status of the item at the time of the report.
The second type of specific restriction applies to information that is considered an “investigative consumer report”. An investigative consumer report is a consumer report that contains information that is obtained through personal interviews with the applicant’s friends, neighbors, colleagues or other persons – such as the type of information that might be obtained during a reference check. Under the FCRA, a CRA cannot report adverse investigative consumer report information unless either:
- The CRA has followed reasonable procedures to confirm the information from an additional source with independent and direct knowledge of the information, OR
- The person interviewed is the best possible source of the information.
2. Support Consumer’s Right to File Disclosures and Disputes
Your employment screening provider must ensure that applicants and employees have the right to:
- Obtain a “file disclosure” from the CRA, and
- Dispute the completeness or accuracy of the information in their file that is maintained by the CRA.
3. Follow the “Disposal Rule”
Your background check provider must take “reasonable measures” to protect against unauthorized access to or use of “consumer information” when the provider disposes of it (e.g., shredding, burning or pulverizing papers, and destruction or erasure of electronic media). “Consumer information” means any record (in any format) about an individual which is or is derived from a consumer report, including compilations of records, handwritten notes in a consumer file, etc.
How can you tell that your background check provider is FCRA-compliant? One way is to first ask them how they meet these 3 key provisions of the FCRA.
Free Report: Fair Credit Reporting Act (FCRA) Basics
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Fair Credit Reporting Act (FCRA) Basics