FCRA Guidelines

Industry issues prior to the FCRA

- Consumer reporting practices were neither transparent, nor regulated - There were almost no legal restrictions regarding access and use - Often, the companies neglected to confirm the accuracy of the information - The companies were secretive about the collection and use of information

Adverse Action by Employers

1. Consent 2. Pre-adverse action notice 3. Provide a copy of the consumer report 4. Provide a copy of "A Summary of Your Rights Under the Fair Credit Reporting Act"

Under FCRA, users must:

1. Give consumers access to their consumer report and the chance to dispute them or correct any errors. 2. Ensure that the information in the report is accurate and complete. 3. Give applicants "notice" when information in their consumer report is used to take "adverse action".

Adverse Action Notice must provide:

1. Name, address, and phone number of the CRA 2. A statement that the CRA did not make the decision to take the adverse action 3. A statement that the CRA is unable to provide specific reasons for the action 4. A notice informing the consumer of her or his right to obtain a free report 5. A notice informing the consumer of her or his right to challenge the accuracy or completeness of any of the information in the report

Under FCRA, CRAs must:

1. Not report outdated negative information 2. Only make consumer reports for users who are legally allowed to use them 3. Maintain records regarding users that received a report

Why was the FCRA enacted? (3 reasons)

1. Prevent the misuse of sensitive consumer information by restricting access to those who have a permissible purpose 2. Establish guarantees that the information supplied by CRAs is as accurate as possible and that the process for collecting it is transparent and fair. 3. Help make the nation's banking and consumer credit systems more efficient

Steps for running a background check

1. Provide written disclosure 2. Obtain Consent 3. Run the report 4. Analyze results and make descision

Rights of the consumer under FCRA

1. right to know what's in their consumer report 2. right to correct and/or dispute inaccurate information 3. right to know who made their report. 4. right to know if unfavorable decisions about them were based on information in their report.

User Certification

A document provided by the background screening company which must be signed by the employer before the screening company will provide background reports to the employer. This is a requirement under the FCRA

Permissible Purpose

A formal way of saying "allowed to use"

Adverse Action

A negative employment action such as not hiring an applicant; not promoting or not retaining an employee based on information on a background check

Examples of Mandatory FCRA Compliance

Hiring + Background Report Tenant Screening +Background Report

Furnisher of Information

If you report information about consumers to consumer reporting agencies - i.e., a credit bureau, tenant screening company, or check verification service - you have legal obligations under the FCRA's Furnisher Rule.

Consumer

Individuals like you or me

Major players in consumer reports

Landlords or property managers Credit grantors Insurers Employers

Are employers obligated to engage the services of a consumer reporting agency for the background screening process?

No, but the CRA is always subject to the requirements under the FCRA.

A Summary of Your Rights under the Fair Credit Reporting Act

Prepared by the Federal Trade Commission, this document must be attached to a background report being provided to an applicant/employee.

Disclosure

Refers to the document and the process of informing an applicant/employee that they will be the subject of a background report.

Equal Employment Opportunity Commission (EEOC)

The EEOC is a federal agency that administers and enforces civil rights laws against workplace discrimination.

ESIGN Act

The Electronic Signatures in Global and National Commerce Act is a United States federal law passed by the U.S. Congress to facilitate the use of electronic records and electronic signatures in interstate and foreign commerce by ensuring the validity and legal effect of contracts entered into electronically. This law allows consumers to provide their "written" authorization electronically or via fax.

FCRA's Furnisher Rule

The FCRA imposes responsibilities on all persons who furnish information to consumer reporting agencies (CRAs). These responsibilities include: -Accuracy guidelines -General prohibition on reporting inaccurate information -Duty to correct and update information -Duties after notice of a consumer dispute (including reviewing relevant information, conducting an investigation, and reporting findings to the CRA) -Duty to report voluntary closing of credit accounts -Duty to report dates of delinquencies -Duties of financial institutions when reporting negative information -Duties when identity theft occurs

Who enforces the FCRA?

The Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) have been granted enforcement authority

What must consumers (i.e., job candidates) and users of consumer reports (i.e., employers) be provide?

They must be provided with two documents: "A Summary of Your Rights Under the FCRA" (also known as the "Summary") and "Notice To Users of Consumer Reports: Obligations of Users Under The FCRA".

Investigative consumer report

a consumer report or portion thereof in which information on a consumer's character, general reputation, personal characteristics, or mode of living is obtained through personal interviews with neighbors, friends, or former employers of the consumer reported on or with others with whom he is acquainted or who may have knowledge concerning any such items of information.

What 3 things does the FCRA ensure?

accuracy, fairness, and privacy of information in consumer reports

Consumer Report

any information about someone's credit, lifestyle and personal characteristics that comes from a CRA and that's used to help make decisions about that person's credit, insurance, housing, employment, and other important matters. Includes: - Credit worthiness - Credit standing - Credit capacity - Character - General reputation - Personal characteristics - Lifestyle and that plays a role in determining a consumer's eligibility for credit, insurance, housing, employment, or other business purposes. AKA: a background check

Consumer Reporting Agency (CRA)

any organization that assembles or evaluates credit or other consumer information, for a fee, in order to provide "consumer reports" to third parties (e.g., GoodHire). Consumer reporting agencies make consumer reports for targeted users and sells those reports to those users.

What does the EEOC investigate?

discrimination complaints based on an individual's race, color, national origin, religion, sex, age, disability, genetic information, and retaliation for reporting, participating in, and/or opposing a discriminatory practice.

Users (of CRA)

someone who uses a consumer report to make important decisions about employment, insurance, housing, or credit.