Do Your Background Checks Meet FCRA Compliance?

Posted: July 10, 2018

FCRA Compliance

When you partner with a background screening vendor, make sure they’re in full compliance with every relevant regulation. One of the most important U.S. compliance requirements is the Federal Fair Credit Reporting Act (FCRA). Find out why background check FCRA compliance is so important for you and your background screening vendor. And, learn about everything you should both be doing to meet compliance.

What is FCRA Compliance?

The Federal Fair Credit Reporting Act (FCRA) went into effect in 1970 to help consumers resolve inaccuracies in their credit reports. In 1996, however, the Act was expanded to include additional customer reports, including background checks for employment screening uses. Today, FCRA compliance is mandatory for any employer utilizing a third-party to conduct background screenings. To learn what you need to be compliant, read the “Notice to Users of Consumer Reports” from the Consumer Financial Protection Bureau.

Prior to the Background Check: Your Checklist

Background screenings are a simple process for applicants. First, you must give them disclosure forms that inform them your organization will obtain a background report for potential employment purposes. This disclosure must be separate from any other paperwork, particularly your release of liability and employment application forms.

Applicants must then sign an authorization that permits you to run this type of check. You can include disclosures on an authorization form or as a standalone form. If you do combine the forms, keep in mind that they may only contain disclosure and authorization statements, nothing else. In addition to complying with the FCRA, these forms also give your background screening company permission to proceed. They may also serve as verification for the third-parties it needs to contact (schools, employers, etc.).

If reference checks are required as part of the background check, you must also disclose to the applicant that you are obtaining an investigative consumer report, including information about personal characteristics, reputation, and character and that they may request a description of the scope and nature of the investigation. If the applicant does request that description, you must provide it within five days. You may also want to put this information in your authorization form in addition to your disclosure so that it’s extra clear.

Prior to the Decision (a Note on Adverse Action): Your Checklist

If you choose to make an adverse decision based the background report your vendor has provided, you have a reasonable period of time (no less than five business days) to provide the applicant a copy of that report, along with the Consumer Financial Protection Bureau’s “A Summary of Your Rights Under the Fair Credit Reporting Act.” Additionally, you must take the following steps:

-Notify the applicant of your decision. Note that your organization made the decision, not the background screening company.

-Inform the applicant of the vendor’s name, telephone number and address.

-Notify the applicant that they may request an additional free copy of the report in the next 62 days.

-Notify the applicant that they can dispute any incomplete or inaccurate information in the report directly with the background screening vendor.

Note: Some states have additional requirements concerning adverse action laws.

Why Should Vendors & Organizations Meet FCRA Compliance?

FCRA compliance is a requirement in every state. Not complying with the FCRA can be extremely costly, as organizations are often sued in federal court for their failure to meet these requirements. Thousands of these types of lawsuits are filed each year.

Additionally, vendors that comply with FCRA show that they care about their customers. A compliant background screening process is a necessity for any reputable background screening company. It proves that vendor is serious about its legal responsibilities.

Moving Forward with FCRA Compliance

Info Cubic is always compliant with FCRA rules and all other relevant legislation. If you aren’t sure of the background screening requirements in your state or country, including background check FCRA requirements, give us a call, or fill out our contact form today. Our experienced team will help you navigate your way to compliance with accurate background screenings you can count on.

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