How to Make Sure You Comply with FCRA

     Part of any background check involves a credit check, but, in order to obtain and use this information, employers need to comply with the Fair Credit Reporting Act, particularly sections 604, 606, and 615. As a background check is used for pre-employment screening and then later for promotions during employment, an employer obtaining this information must first make sure such a report is prepared by a consumer reporting agency (CRA). This report will have a list of credit payment records, driving records, and criminal history. In some cases, a more thorough report will be done, called an investigative consumer report. An investigative report will involve a CRA interviewing an individual’s family, friends, neighbors, and associates.

     But before a consumer report is prepared, the individual must be notified in writing and that individual must give written authorization. If the individual does not give written authorization for an employer or potential employer to conduct a consumer report, obtaining a report is illegal.

     Once the individual gives his or her signature and a report is obtained and reviewed, an employer can deny an individual based on the information found in the report. However, in denying an individual for adverse action that individual must be given a pre-adverse action disclosure including a copy of the report and a copy of “A Summary of Your Rights Under the Fair Credit Reporting Act.” In addition, the individual must be given notice that the action taken has been in adverse action.

     Before giving a consumer report, a CRA will require that you, an employer, certify you are in compliance with FCRA and that you will not misuse any information enclosed in the report. In the case of non-compliance, an individual can sue in federal court for damages and seek punitive damages for deliberate violations.