What if I want to run a background check for non-employment purposes?
The Fair Credit Reporting Act (FCRA) lists specific categories of permissible purposes that allow consumer reporting agencies like Checkr to provide background check reports to customers. While many Checkr customers are requesting reports under an employment permissible purpose, there are additional non-employment purposes available under the FCRA:
- Insurance Underwriting: To evaluate and analyze risks involved in insuring consumers.
- License Eligibility or Government Benefits: To consider an applicant’s financial responsibility or status, as required by law, to determine a consumer’s eligibility for a license or other benefit granted by a governmental agency or entity (for example, certain state benefits).
- Extension of Credit: To extend credit as a result of an application from a consumer, or for the review or collection of a consumer’s account.
- Legitimate Business Need: In connection with a transaction initiated by the consumer OR to review whether the individual continues to meet the terms of an account the consumer holds with that business.
How are the documentation requirements different for non-employment purposes?
Generally speaking, the end-user (customer) requirements for non-employment purposes are less burdensome than for employment. For example, non-employment purpose reports do not require the same detailed adverse action notice process; a verbal notice to the candidate that they will not be moving forward is sufficient.
There remain requirements around the consumer’s informed consent and disclosures to the consumer. Ordering a report for non-employment purposes still requires a customer to obtain informed consent from the consumer(s) on whom they’re requesting a background check report. While a writing is not required under the FCRA, we often see customers collecting and recording the consumer’s consent to a background check report in the terms of service or other written form, as a best practice for audit purposes.
In addition to informed consent, a non-employment permissible purpose may still require additional steps. Depending on the consumer’s location and the specific screening requested (such as Motor Vehicle screening), customers may still be required to provide some additional disclosures to comply with state, local, and/or agency laws. We recommend speaking with your attorneys to make sure you have the appropriate consent and disclosure(s) for the permissible purpose applicable to your business, the screening requested, and the location of the consumer.