Key provisions of the FCRA

Step 1: Before You Get A Consumer Report

Before you can order a consumer report for employment purposes, you must notify the individual in writing - in a document consisting solely of this notice - that you are using the report. You must also get the person's written authorization before you ask a CRA for the report. If you want the authorization to allow you to get consumer reports throughout the person's employment, make sure you say so clearly and conspicuously. It's a good idea to review applicable laws of your state related to consumer reports. Some states restrict the use of consumer reports - usually credit report - for employment purposes. 


Step 2: Before You Take Adverse Action

If you rely on a consumer report for an "adverse action" - denying a job application, reassigning or terminating an employee, or denying a promotion - be aware that:

Before you take the adverse action, you must give the individual a pre-adverse action disclosure that includes a copy of the individual's consumer report and a copy of "A Summary of Your Rights Under the Fair Credit Reporting Act" - a document prescribed by the Federal Trade Commission. The CRA that furnishes the individual's report will give you the summary of consumer rights.


Once you have completed the ‘pre adverse action’ process outlined in the Fair Credit Reporting Act, the Equal Employment Opportunity Commission (EEOC) also requires that you conduct an individualized assessment prior to taking adverse action.  An overview of this assessment procedure, along with the correlating requirements of a written policy on the use of criminal records in employment decisions, can be found on RSAI EEOC webpage.  

Step 3: After You've Taken Adverse Action

After you've taken an adverse action, you must give the individual notice - orally, in writing, or electronically - that you have taken the adverse action. The notice must include:

the name, address, and phone number of the CRA that supplied the report
a statement that the CRA that supplied the report did not make the decision to take the adverse action and cannot give specific reasons for it
a notice of the individual's right to dispute the accuracy or completeness of any information the agency furnished and his or her right to an additional free consumer report from the agency upon request within 60 days


What's your responsibility? 

In any case where information in a consumer report is a factor in your decision - even if the report information is not a major consideration - you must follow the procedures mandated by the FCRA. In this case, you must provide the applicant a pre-adverse action disclosure before you reject his or her application. When you formally reject the applicant, you must provide an adverse action notice.

The applicants for a sensitive financial position have authorized you to obtain credit reports. You reject one applicant because his or her credit report shows a debt load that may be too high for the proposed salary, even though the report shows a good repayment history. You turn down another because the credit report shows only one credit account and you want someone who has shown more financial responsibility. 


Are you obliged to provide any notices to these applicants? 

Both applicants are entitled to a pre-adverse action disclosure and an adverse action notice. If any information in the credit report influences an adverse decision, the applicant is entitled to the notices - even when the information isn't negative.

The applicant has the right to receive a copy of their report from RSAI Licensure Program.

Noncompliance

There are legal consequences for employers who fail to get an applicant's permission before requesting a consumer report or fail to provide pre-adverse action disclosures and adverse action notices to unsuccessful job applicants. The FCRA allows individuals to sue employers for damages in federal court. A person who successfully sues is entitled to recover court costs and reasonable legal fees. The law also allows individuals to seek punitive damages for deliberate violations. In addition, the Federal Trade Commission, other federal agencies, and the states may sue employers for noncompliance and obtain civil penalties.

EEOC

The Fair Credit Reporting Act imposes, among other obligations, the requirement of using consumer reports accessed for employment purpose in compliance with federal and state Equal Employment Opportunity (EEO) regulations. Information relating to employment issues and the EEOC can be found on the EEOC’s Employers page http://www.eeoc.gov/employers/index.cfm.

With regard specifically to criminal records, the EEOC recently issued updated guidance explicitly relating to the use of arrest and conviction records in employment decisions. The guidance document, Enforcement Guidance on Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964 is available on the EEOC’s website http://www.eeoc.gov/laws/guidance/arrest_conviction.cfm.

For more information

Visit the FTC’s Business Center: Your Link to the Law. There, you can find specific FCRA information:

  • Getting consumer reports (see Section 604(b) of the FCRA, 15 U.S.C. § 1681b(b));
  • Taking an adverse action (see Section 604(b), 15 U.S.C. § 1681b(b), and Section 615(a)), 15 U.S.C. § 1681m(a);
  • Compliance for the trucking industry (see subsections (b)(2)(B), (b)(2)©), and (b)(3) of Section 604(b), 15 U.S.C. § 1681b(b));
  • Using investigative consumer reports (see Section 606 of the FCRA, 15 U.S.C. § 1681d);
  • Investigating misconduct (see Section 603(x) of the FCRA, 15 U.S.C. § 1681a(x)).


In addition to the Federal Trade Commission, which works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace, the Consumer Financial Protection Bureau (CFPB) is a “is a 21st century agency that helps consumer financial markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives.

To get free information on consumer topics, including mortgages, credit cards, student loans, bank account or service, vehicle or consumer loans, student loans, credit reporting, money transfers, and other financial services call toll-free, 1-855-411-2372 or visitwww.cfpb.gov/learnmore. To file a complaint, contact the CFPB at 855-411-2372 or use the online complaint form.

If you feel you are a victim of identity theft, the Consumer Financial Protection Bureau (CFPB) has information available to assist you. The following URL is the CFPB's website:www.consumerfinance.gov/learnmore. In addition, the CFPB has published a document that provides an overview of the identity theft issue; it is titled “Remedying the Effects of Identity Theft.”  

Consumer Financial Protection Bureau for the Consumer

1-855-411-2372

www.consumerfinance.gov/learnmore 

RSAI Contact
RSAI Licensure Program
1201 63rd Street
Des Moines IA  50311
Phone: 515-251-5970
Fax:      515-251-5985
E-Mail: info@rsaia.org

 

THIS INFORMATION IS NOT MEANT TO PROVIDE LEGAL ADVICE OF ANY KIND. LEGAL ADVICE SHOULD BE SOUGHT FROM YOUR ATTORNEY. 

FCRA Guidelines for Administrators