FCRA (Fair Credit Reporting Act) and Background Checks

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June 28, 2018

Background Check FCRA

The Fair Credit Reporting Act (FCRA) is a piece of legislation that was passed by the United States that promotes quality accuracy, fairness, and privacy practices when your data is being used by consumer reporting agencies. This includes information and data that is collected by the likes of credit bureaus and other financial agencies that collect, store, and publish consumer information for use in background checks.

What Is The FCRA Used For?

The FCRA is used when employers are performing background checks on candidates that they are considering for hire. Background checks are often used as the primary law for regulating background checks for prospective employees. All background checks which are conducted by a 3rd party are covered by the FCRA laws whether they include someone's credit report or not.

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Before A Background Check Is Requested:

Before the background check is requested from an agency, its is important to understand that the requests for background check is submitted in a separate document away from all of the other requests. The submission must make it clear that the information being collected is only for the purpose of being used for the to determine if a candidate qualified for a job. These background checks are mainly used to determine the character, general reputation, personal characteristics, and lifestyle of the individual who is being considered for employment.

The employer will always have to provide the job candidate with a complete copy of the FCRA rules and the person's rights as they are doing the background check to determine if this person is a candidate for the job. The employer also must provide the candidate with information of all of the things that will be checked in their background including things like if medical records will be used.

Prospective employees must provide a signature which provides the company with permission to obtain and review this information from the sources appropriate to providing it.

After A Background Check Is Received:

After the information for the background check that has been requested is received it must be made clear that the employer is only to use the background check information for the purposes of hiring the specific employee whose background check they are currently viewing. The information for these background checks must only be used as directed and permitted by the specific statute, regulation, or order provided.

The information is not to be disclosed to anyone who is not vital to the process of hiring the prospective employee. The disposal of any sort of information relating to the background checks must also be done in according to the laws in that specific area.

If Adverse Actions Are Taken:

If adverse actions are taken the company is required to notify the person whose information was compromised immediately. The person whose information was compromised must also receive a copy of the exact report and summary of their individual rights to take action on the information that was inappropriately shared.

If adverse actions are taken by the potential employer they must also provide the employee with the exact agency who provided the adverse information that helped them make their decision. This includes the exact agency who supplied the information as well as the name, address, and telephone number of the agency as well as a notice as to the fact that the person can obtain another free copy of their information from the agency who provided adverse information within 62 days of the information being discovered to check their personal records.

How Do FCRA Laws Protect Consumer Rights?

Consumer rights under the FCRA are stated as follows:

  • The consumer must be notified if there is information in his file that is going to be used against him. This includes any sort of credit reports or another piece of consumer information that may be used against them including if they are going to be denied for something such as credit, insurance, or employment opportunities.
  • If the consumer is having information used to deny them a service they must be provided with the specific name address, phone number, and other contact information of the agency who provided that information that caused them to  be denied.
  • The consumer will always have a right to know what information is in their file and receive ONE free disclosure of this information per 12 months. More disclosures are able to be purchased at any time  from national credit bureaus.
  • Consumers may always ask for their credit scores and the numerical equations that created each individual score from the national credit bureaus.
  • Any inaccurate information may be disputed by the consumer at any time.
  • The consumer has right to take legal action against the FCRA and seek financial remuneration for any any reporting violations that occur.

The FCRA laws are in place to protect the consumer from any faulty reports that may damage their ability to gain credit, obtain employment, stops them from getting insurance, or stop them from participating in any other consumer activity if they believe that information was inaccurate.

Disputes may also be made against any information that the consumer believes is incorrect. If the issue is not resolved, the consumer is protected by being able to take the credit bureau to court for remunerations for the damages that were inflicted.

Conclusion:

Knowing your rights when it comes the FCRA ensures that your personal information is protected and only used for intended purposes. If you receive notice for any adverse effects that your consumer information has had on you, you have your rights to take action to correct that information if you feel that it is incorrect. You are also entitled to take legal action when such measures are necessary. Knowing how you can use the FCRA to protect yourself is vitally important to understanding how you have the rights to protect yourself and your personal information from further harm.

For more information on how you have the rights to protect yourself from adverse information that may effect your personal life, please feel free to contact us.

Source:
https://www.investopedia.com/terms/f/fair-credit-reporting-act-fcra.asp
https://www.law.cornell.edu/uscode/text/15/1681

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