FTC Issues New Guidance on Background Screening for Consumer Reporting Agencies

A new guidance titled “What Employment Background Screening Companies Need to Know About the Fair Credit Reporting Act (FCRA)” has been released by the Federal Trade Commission (FTC) to better define the responsibility background screening firms have to clients and consumers in general. Background reports are described by the FTC as consumer reports under the FCRA as they “serve as a factor in determining a person’s eligibility for employment, credit, insurance, housing, or other purposes which include information on a consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living.”

The responsibilities of consumer reporting agencies under federal law are stated as such:

·         Following reasonable procedures to assure accuracy

·         Getting certifications from clients

·         Providing clients with information about the FCRA

·         Honoring the rights of applicants and employees

Following reasonable procedures to assure accuracy

The release of this guidance tells you one thing. Many consumer reporting agencies are not taking reasonable measures to ensure that the report is accurate. Ensuring accuracy means a couple of different things. One, the background screening company needs to make sure that the information obtained relates to the individual in question. And two, the information obtained has not been expunged or otherwise sealed.

Essentially, our duty to our clients and consumers alike is to provide background information that can be directly linked to the applicant/employee through personal identifiers, and the report consists of strictly convictions as opposed to arrest records. Individuals should not be punished for an arrest that did not result in a conviction. That is why our adjudication team verifies any information found in a national criminal database search at the county level.

Getting certifications from your clients

Basically, CRAs need to make sure that their clients have a permissible purpose to obtain the background report. In this case, permissible purpose means that the background check is used solely for the determination of employment. Therefore, background screening companies must get confirmation from their clients that:

1)      The employer notified the applicant and got the applicant’s written permission to get a background report

2)      The employer will comply with the FCRA requirements; and

3)      The employer won’t discriminate against the applicant or employee, or otherwise misuse the information in violation of federal or state equal opportunity laws or regulations

It is for this reason that clients are firmly vetted before the use of our services. Once it is confirmed that the client is a business using our services solely for employment purposes, they must sign an agreement that states that they will comply with FCRA requirements, including attaining consent prior to conducting a background check. Consent forms are stored for auditing purposes.

Providing your clients with information about the FCRA

Clients must receive information about their responsibilities under the FCRA. The document “Notice to Users of Consumer Reports” must be provided to each client to ensure they know what is required of them under the statute. One such responsibility of employers is informing every applicant or current employee of their consumer rights in terms of background screening. This information, known as “A Summary of Your Rights Under the Fair Credit Reporting Act”, is to be provided to each applicant/employee undergoing a background check.

Honoring the rights of applicants and employees

Because the use of consumer reports can bar individuals from employment, credit, insurance, or housing, it is important for consumers to know their rights. These rights are protected under the FCRA due to the major impact inaccuracies can have on an individual’s ability to obtain employment. The following is a list of consumer rights under the FCRA:

·         You must be told if information in your file has been used against you

·         You have the right to know what is in your file

·         You have the right to dispute incomplete or inaccurate information

·         Consumer reporting agencies must correct or delete inaccurate, incomplete, or unverifiable information

·         Consumer reporting agencies may not report outdated negative information

·         Access to your file is limited

·         You must give your consent for reports to be provided to employers

·         You may seek damages from violators

To read the FTC guidance in full, click here.

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S2Verify is an NAPBS-accredited process innovator in the application of integrated hiring solutions and employment screening technologies. S2Verify’s services cater to the needs of organizations that rely on employee and volunteer information that is comprehensive in scope, delivered quickly to key managers, and easy to read, understand, and use by authorized personnel. Headquartered in Atlanta with Operational Support Centers in Miami and Chicago, the privately-held company specializes in providing a customizable yet fully integrated, best-in-class set of applicant tracking, drug screening, and criminal background checks that address business and consumer needs either poorly met or not met at all by leading, nationally-branded providers of mass-market background screening solutions. The focus on addressing shortcomings in the background screening industry attributed to S2Verify’s inclusion in the Inc. 500’s list of fastest growing companies in the United States.