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Compliance

If you are using information we provide for “employment purposes” (which includes individual contractors and agents that are not traditional employees), you must follow the FCRA requirements listed below:

Before using our services

It is important to educate yourself. One important and well-written document to read is the Consumer Financial Protection Bureau “Notice to Users of Consumer Reports”.

Before the check

The background screening process is relatively simple for the applicant. First, you must give the applicant a disclosure form that informs him or her that you will obtain a consumer report for employment purposes. This disclosure must be separate from anything else, especially your employment application or any release of liability.

Second, the applicant must sign an authorization that permits you to obtain a consumer report for employment purposes.

The disclosure must be on a standalone form, separate from the authorization form. The rule of thumb for this is whether each sentence begins with either “We hereby disclose to you that …” or “You hereby authorize us to …”.

The primary purpose these forms serve is to comply with the FCRA. These forms also give the background screening company permission to do the check and may serve as verification to former employers or schools that they are allowed to give information.

To give you an idea of the importance, you can read the 2017 Ruling from the Ninth Circuit Ruled that Disclosures Containing Waivers Violated the FCRA and that a prospective employer’s violation of the FCRA is ‘willful’ when the employer includes terms in addition to the disclosure, such as the liability waiver here, before procuring a consumer report or causing one to be procured.

Where we obtain information for you based on an interview (for example, reference checks), you must also disclose to the subject that:

  1. You are obtaining an investigative consumer report, including information about character, general reputation, personal characteristics, or mode of living, (whichever is applicable), and
  2. He or she may obtain a description of the nature and scope of our investigation. If the subject requests that description, you must provide it within five days. Even though this is in the nature of the disclosure, you may want to put this information in your authorization, to protect the “repeatedness” of your disclosure.

Before the decision

After a reasonable period of time, no less than five business days, before making an adverse decision based on a report, you must provide the subject a copy of the report and the Consumer Financial Protection Bureau’s “Summary of Your Rights Under the Fair Credit Reporting Act”.

On the decision

When you make an adverse decision based on a report, you must:

  • Notify the subject of the decision
  • Notify the subject of our company name, address and telephone number
  • Notify the subject that we did not make the decision
  • Notify the subject that they can get another free copy of the report during the next 62 days
  • Notify the subject that they can dispute any inaccurate or incomplete information in the report with us

In addition, many states (especially California) have additional requirements concerning your use of screening services.

  • Sample Disclosure Forms
  • Sample Authorization Forms
  • FTC Summary of Rights
  • Sample pre-adverse action notices
  • Sample adverse action notices
  • An overview of FCRA Employer Obligations
  • An overview of how the Driver’s Privacy Protection Act of 1994 impacts the use of motor vehicle reports in consumer investigations

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