Avoiding FCRA Lawsuits: Disclosure and Consent

Posted: October 17, 2022

Spooky season is upon us so here’s a scary thought: there were 5,406 FCRA lawsuits filed in 2021 and an additional 1,500 lawsuits filed during the first three months of 2022. Companies must take the necessary steps to reduce their risk of an FCRA lawsuit. We have been  reviewing best practices for background screening to help your company avoid any potential FCRA lawsuits, covering why being consistent is key in a previous article. Next up: Disclosure and Consent

The Fair Credit Reporting Act (FCRA) requires employers conducting background checks for employment purposes to do the following:

• Provide a stand-alone written disclosure to applicants that their information will be obtained for employment purposes. This disclosure will contain specific details on the background check.
• Obtain written authorization in a separate document prior to conducting a background check.

Here are a few best practices regarding using disclosure and authorization forms with background checks:

• Use clear and concise wording that is easy to understand.
• Avoid using fine or small print.
• Avoid language that claims to release you from liability for conducting, obtaining, or using the background screening report.
• Avoid asking applicants to certify that all information in the job application is accurate.
• Avoid wording that requires applicants to acknowledge that your hiring decisions are based on legitimate non-discriminatory reasons.
• Include the name of the company that will be preparing the background report. Include the company’s contact information, such as address, toll-free telephone number and website.
• Reference the “Summary of Your Rights Under the Fair Credit Reporting Act” document in the acknowledgement form and provide the document separately.
• Clearly define the scope of the background report, disclosing each type of information that will be included in the report (i.e., work and education history, criminal history, etc.)
• Have the applicant acknowledge receipt of both the disclosure and authorization by requiring a signature on each form.
• Ensure compliance with state-specific requirements regarding disclosures and authorizations and use a separate form to provide state-required notices.
• Do not include statements regarding the consumer’s rights to find out more regarding the “nature and scope” of the investigative consumer report or their right to access the screening company’s files (also known as a “copy request”). 
• We recommend partnering with a third-party background screening provider to handle all of this for you, especially a provider with an applicant portal, which will automate the whole process

There is no better time than the present to review your company’s background screening policies and procedures. Or, if you have questions, please contact us at (877) 360-4636.

Please consult with qualified legal counsel when developing hiring and background screening procedures.