Ch 6-(Test 3)-Fair Credit Reporting Act (FCRA)

What are the 5 major provisions of the FCRA?

-Notice, authorization, & certification procedures -Address-checking procedures -Adverse action procedures -Disposal rules -Furnisher rules

What 2 documents must the employer provide the affected employee prior to taking adverse action?

-copy of report -copy of document from FTC called A Summary of Your Rights Under the Fair Credit Reporting Act

integrity

info. furnisher provides to consumer reporting agency about someone is substantiated by the furnisher's records when it is provided, and is provided in form and manner designed to minimize likelihood that info. may be incorrectly reflected in a consumer report

Before the FCRA was amended in 2003, the Federal Trade Commission (FTC), agency responsible for interpreting & enforcing the law, took the position that it applied to...

investigations of workplace misconduct

Explain what the employer is to do when there is no longer a legitimate business reason to keep collected information.

it must dispose of them properly, using a level of document destruction that is reasonable in the context of the business.

Any businesses that fails to follow these disposal rules can be held...

liable for resulting damages (for example, unauthorized credit charges).

Before obtaining an investigate consumer report, an employer must...

make additional disclosures to the person about whom the report will be obtained.

If an individual sues an er over violations of the FCRA, the penalties the er might face depend...

on whether the employer's actions were willful or negligent.

Under the FTC's Disposal Rule, all businesses must properly destroy consumer reports and information derived from them in both...

paper and electronic formats.

If the FTC investigates an employer and finds that it has repeatedly and knowingly violated the FCRA, the employer must...

pay a penalty of not more than $2,500 per violation.

An employer that misleads a consumer reporting agency must...

pay the agency either its actual damages or $1,000, whichever is greater.

The Disposal Rule does not impose time limits for destroying consumer information so what determines the disposition time limits?

-employers must remember that may need reports long after they've rejected or accepted an applicant -it is a self defense- to refute an employment discrimination claim

FCRA covers all employers, including:

-federal govt -state govts -local & municipal govts -private ers, regardless of size

What is the time limit imposed under the Disposal Rule?

does not impose time limits for destroying consumer information

If an individual thinks the employer has violated the FCRA, the employee can sue the employer in ___________.

federal district court

When the FCRA was passed in 1970, there were no...

federal restrictions on access to consumer credit information, and there was no way for a person to challenge the info. in his or her credit report.

If an employer uses an outside agency to investigate an employee's suspected violation of a law or regulation the investigation is excluded from the definition of ___________.

"consumer report" under the FCRA.

Why is the address-checking procedure required under the FCRA?

-An employer that receives a notice of address discrepancy from a consumer reporting agency after requesting a consumer report must take steps to verify the identity of the subject of the report. -it must follow reasonable procedures to determine that the report is actually about the person on whom the employer requested the report -means of verifying the identification of a person

If a federal agency or department requests a consumer report or an investigative consumer report for employment purposes, it does not have to comply with the adverse action procedures if the head of the dept. or agency states the following in writing:

-the report is part of a national security investigation -the agency or dept. has jurisdiction over the investigation -Negative consequences-including danger to life or physical safety, destruction of evidence, or flight from prosecution-will result if the agency or department complies with the standard adverse action procedures

If an employer is found guilty of negligently complying w/ FCRA, the employer

-will have to pay the individual actual damages, -costs of the action, -and attorneys' fees

disposition log

...

In a 2010 survey conducted by SHRM, ______ of the respondents stated that their companies run credit checks on all applicants; ______ stated that they run credit checks on select job candidates; and the remaining _____ said that their companies never check applicants' credit reports.

13%, 47%, 40%

The statute of limitations then becomes what?

2 years after discovery of false information

What changes did the FACT act make?

?

consumer reporting agency

person or an entity that regularly provides consumer reports to third parties

The FACT act requires the employer taking adverse action based on an investigation to provide the employee with what which is change from the FCRA requirement.

the employer must provide the ee w/ a summary of the investigation report.

What does the summary not need to disclose?

the sources of the information

consumer report

written or oral information that (1) will be used for employment purposes, (2) comes from a consumer reporting agency, and (3) relates to a person's: -creditworthiness -credit standing -credit capacity -general reputation -personal characteristics, or -lifestyle

investigative consumer report

a consumer report based at least in part on personal interviews that go beyond simply verifying facts that the person has provided to the employer

furnisher

an entity provides info. relating to consumers to a consumer reporting agency for inclusion in a consumer report

Penalties for violating the FCRA depend on who is bringing the lawsuit-...

an individual, a consumer reporting agency, the FTC, another federal agency, or a state.

adverse action

any decision made by an employer for employment purposes that negatively affects an employee or applicant

The FCRA applies to what workers?

applies to anyone about whom the employer gathers information in a way covered by the FCRA -this means that any time an employer seeks a consumer report or an investigative consumer report for employment purposes, the employer must comply with the FCRA

FTC announced this interpretation in the...

Vail letter, an opinion letter providing guidance on the law's application in response to a question from an attorney.

What Act amended the FCRA?

FACT act?

Which agency enforces the FCRA and what is its authority?

FTC enforces FCRA -and can on its own initiative, investigate & bring a civil action against anyone it suspects of violating the FCRA.

What federal agency administers the FCRA?

Federal Trade Commission (FTC)

Background checks are considered to be ________ under the FCRA.

consumer reports

Employers may request a consumer report on applicant or employee only for ______________ purposes.

employment

Why do employers need to retain consumer information on applicants and employees?

its a self defense, to refute an employment discrimination claim.

Under the FCRA credit bureaus are considered to be what?

consumer reporting agencies-those who use credit information and other information gathered by third parties to make important decisions

A negligent action occurs when the employer...

doesn't know that it is violating the law but should know.

Employers cannot request that a consumer report or investigative consumer report for any purpose other than _____________ nor without notifying the individual and receiving his/her __________.

employment purposes, authorization

Employers may request a consumer report or an investigative consumer report on an applicant or employee only for...

employment purposes.

The employer must report the employee or applicant's correct address back to the agency if it has a reasonable belief that the report relates...

to the person about whom the employer requested the report; the employer establishes a continuing relationship w/ the person; and the employer regularly provides information to the agency in the ordinary course of business.

A willful action occurs...

when the er knowingly and intentionally violates the law.

Explain special rules for obtaining medical information as part of a consumer report on an applicant, ee, or independent contractor, these rules apply:

-info. must be relevant to the employment -er must get specific written consent from the applicant, employee, or independent contractor that describes in clear and conspicuous language how the information will be used.

After taking adverse action against an employee, the employer must give him/her an adverse action notice in oral, written, or electronic format containing what information?

-name, address, & phone # of consumer reporting agency that supplied the report -statement that consumer reporting agency did not make decision to take adverse action & cannot give individual specific reasons for adverse action -statement that individual has a right to dispute accuracy or completeness of the information in the report, and -statement that individual has a right to request a free copy of report from consumer reporting agency

Before requesting a consumer report on someone, an employer must...

-notify that person properly -obtain his or her authorization -& then verify to the consumer reporting agency that notice was given and authorization received

What 3 things must the employer do to obtain a consumer report or an investigative consumer report o a current or prospective employee or contractor?

-notify the subject of the report, in writing, that they want to obtain a report -obtain the person's written authorization before asking a consumer reporting agency for a report -verify to the consumer reporting agency that they have notified the subject of the report and obtained written authorization

If an employer is found guilty of willfully failing to comply with any of the FCRA's provisions, it must:

-pay the actual damages the person suffered- at least $100 but not more than $1,000 -pay any punitive damages that the court might order, and -pay the attorneys' fees and court costs of the person bringing the action.

Two goals of the FCRA:

-protect privacy of consumer credit information by restricting access to those who have both a legitimate need for the information and the consent of the person whose records are sought, and -ensure accuracy of information by giving people the right to se their credit reports, right to know whether someone has decided not to give them credit, employment, housing, or other benefits based on that information, and right to dispute information that is incorrect or incomplete

Explain the special rules for investigative consumer reports.

-statement that requested report is an investigative consumer report -statement briefly identifying types of info. report will contain-individuals character, general reputation, personal characteristics, way of life, and -statement that individual has right to submit written request for complete and accurate info. about the nature & scope of investigation

Explain the individual complaint process.

Individuals who think that an employer has violated the FCRA can sue the employer in federal district court within 2 years of the violation.

Based in part on personal interviews that go beyond simply verifying facts that the person has provided to the employers.

Investigative consumer report

Explain what is required to comply with the Disposal Rule.

businesses should store consumer reports and other documents that include consumer information securely-for example, in a locked cabinet or under a closely guarded password if stored on computers or electronically. -should also limit access to trusted ppl who have legitimate need for info.

If a current of former employee disputes the information an employer has contributed, the employer must conduct a ________________.

reasonable investigation

The FACT act amendments do, however, require what relative to the above exception?

require disclosure after an investigation that results in an adverse employment action

Explain the FTC's Disposal Rule

requires all businesses to safeguard and eventually destroy consumer reports & any info. derived from those reports

What must the summary cover?

should cover the "nature and substance" of the investigation that led to the adverse action

Businesses must use reasonable and appropriate methods to avoid unauthorized access to or use of such consumer information-for example, by...

shredding paper and erasing disks or computer files.

Explain what is required to fall within the exception of investigations of alleged workplace misconduct:

the investigation must be employment related, and its results must not be disclosed to anyone except the employer and certain governmental entities.

Once an employer receives a notice of address discrepancy, it must follow reasonable procedures to determine that the report is actually about...

the person on whom the employer requested the report.

Before taking adverse action against someone based on a consumer report, an employer must provide...

the person with a copy of report & copy of FTC's document summarizing a consumer's rights under the FCRA.

After taking adverse employment action against someone based on a consumer report, an employer must provide...

the person with an "adverse action notice" that contains certain disclosures about the consumer reporting agency and the individual's rights.

employment purposes

to use information to decide whether to hire, promote, reassign, or terminate someone

Certain exceptions to these requirements exist for employers in the...

trucking industry & employers hiring 3rd parties to investigate alleged employee misconduct.

Under what condition does the employer not need to provide notice and obtain authorization to alleged workplace misconduct investigations?

when an employer uses an outside party (such as an investigative agency or a law firm)

Under what situation does the above not apply?

willful violation

What is the statute of limitations in the above situation?

within 2 years of the violation