What is the Fair Credit Reporting Act (FCRA)?

This article will help you understand:

• The Fair Credit Reporting Act (FCRA) 
• Your Responsibilities as an End-User 
• Checkr's Responsibilities as a CRA

The Fair Credit Reporting Act (FCRA)

The FCRA is a federal law that governs how companies order, use, and consider consumer reports, (including background or credit checks).   

For the purposes of employment, the FCRA applies to both full-time employees and independent contractors.

Enforcement of the FCRA is overseen by the Federal Trade Commission (FTC) as well as the Consumer Financial Protection Bureau (CFPB). The law was enacted to promote the accuracy, fairness, and privacy of consumer information contained in the files of consumer reporting agencies like Checkr. To that end, it provides safeguards and rights for the consumer (the subject of the background report, for example the candidate or employee).

The Consumer Reporting Agency (CRA, such as Checkr) providing the consumer report and the company that ordered the report (the End-User) must adhere to certain safeguards.

The FCRA places responsibilities and obligations on the End-Users of consumer reports to ensure consumers’ rights are protected.

Your Responsibilities as an End-User

As an end-user under the FCRA, your responsibilities and duties may vary depending on the purpose for which you obtain a consumer report, including but not limited to insurance underwriting, tenant screening, or employment-- i.e. the enumerated “permissible purposes” for obtaining a consumer report allowed by the FCRA.  End-users have specific duties and obligations under the FCRA when they obtain a background check report for employment purposes (such as screening, hiring, or promoting job applicants, employees, or independent contractors).  These duties include:

1. Obtain a consumer report(s) for a FCRA-enumerated permissible purpose(s) (Permissible Purpose);
2. Provide notice to the consumer in writing that you intend to obtain a consumer report for employment purposes (Written Disclosure);
3.  Obtain the consumer's  written consent to run a report (Written Authorization); 
4. Provide the consumer with a “pre-adverse action notice,” a summary of their rights under the FCRA, and a copy of their report if you intend to make an adverse decision (such as declining them for employment or promotions) based on the information in the report (Pre-Adverse Action);
5. Waiting Period: Give the consumer a reasonable waiting period to dispute the information contained within his or her consumer report before making a final adverse decision (Waiting Period);
6. Notify the consumer in writing when an adverse action is taken (Final Adverse Action Notice);
7. Identify the CRA that provided the report, so that the accuracy and completeness of the report may be verified or contested by the consumer.

As your partner in background check screening, Checkr helps facilitate your compliance with the FCRA by:

• Written Permission. If you are utilizing Checkr’s hosted-flow process, and as part of the authorization process, Checkr will provide the candidate with the summary of rights and requisite federal, state and/or local disclosure notice(s) as applicable. Checkr hosts these forms and, with your approval, they are incorporated into the consumer’s background check process. See our disclosure and authorization article for more information.
• Adverse Actions.  You can use Checkr’s dashboard to help with the adverse action process. Specifically, Checkr can send pre-adverse action notices (as required by the FCRA for employment screening) and will automatically follow up with the required post-adverse notice following the statutory waiting period. See our adverse action article for more information.

That said, Checkr is assisting you in your duties -- under the law, you are ultimately responsible for knowing and meeting your responsibilities under federal, state and/or local law.

Checkr's Responsibilities as a CRA

As a consumer reporting agency (CRA), Checkr’s responsibilities are different from an end-user’s under the FCRA, including:

• Credentialing end-users to run background checks which includes confirming end-users have a permissible purpose to obtain the report;
• Maintaining strict procedures to ensure maximum possible accuracy of information in reports, or sending a contemporaneous notice to consumers when we report potentially adverse information;
• Providing consumers with all information in their files upon request (also known as a Full File Disclosure);
• Re-investigating inaccuracies and disputes by candidates as to information within their background check reports within 30 days; and
• Not reporting obsolete information, such as non-convictions older than seven years.

Note again that these are different from your responsibilities as an end-user. For example, while CRAs are restricted on what can or cannot be reported in a background check (such as inaccurate or obsolete information), end-users are responsible for how the information is reviewed and what actions they can take.

Following the above procedures ensures that candidates are aware of their rights under the FCRA and are given the opportunity to address concerns about their background check.