Sarma » Is Your Business FCRA Compliant?

Is Your Business FCRA Compliant?

Slide background

Is Your Business FCRA Compliant?

If you aren’t familiar with the acronym FCRA, then I would recommend a channel change to the news, or even better an internet search on these four important letters. FCRA stands for Fair Credit Reporting Act, which is a consumer protection statue that regulates the screening process. The purpose of this act is to require consumer reporting agencies to adopt reasonable procedures for meeting the needs of commerce for consumer credit, personnel, insurance and other information. This regulation must be followed in a manner which is fair and equitable to the consumer with the regard to the confidentiality accuracy, relevancy, and proper utilization of such information in accordance to such information with this title.

Recently, well-known companies have entered into the spotlight for FCRA violations and are facing class action lawsuits that ultimately will cost these companies possibly hundreds of thousands of dollars. Whole Foods, Disney, and just recently Auto Zone are answering to allegations of various FCRA violations. The growing number of lawsuits popping up could be a direct result of the economy, which is turning into a very competitive job market. Following the tips below will help you stay above the lawsuit trend, and FCRA compliant. You can also visit the FTC website to get detailed information on the Fair Credit Reporting Act.

Written Disclosure and Authorization Required

The FCRA requires any employer intending to run a consumer report to first disclose to applicants or employees that a consumer report may be obtained for employment purposes. This disclosure cannot be included in an employment application or other document that contains any extraneous information. The employer must also obtain an employee’s or applicant’s written consent before running the report.

Reporting Requirements

Employers also must comply with specific reporting requirements. Before obtaining a consumer report from a consumer reporting agency, the employer must provide certification to the reporting agency that they are requesting the report for employment purposes;have provided the required disclosure to the applicant; have obtained the necessary written consent to obtain the report; will provide the applicant with a copy of the report along with notifying them of their rights before taking any adverse action based in whole or in part on the results; an will not use the results from the report in a manner that violates federal or state equal opportunity laws.

Pre-adverse Action and Adverse Action Notices

If employer plans to take any adverse action based in whole or in part upon results obtained from a consumer report, the FCRA requires the employer to provide specific notifications to the applicant or employee.

An “adverse action” is either a denial of employment or any other decision that adversely affects any current or prospective employee. The FCRA requires employers to provide a copy of the consumer report results to the applicant or employee and additionally provide them with a copy of their rights under the FCRA (the “Summary of Rights Under the FCRA”) before taking adverse action based upon information contained in the consumer report.

When the employer takes adverse action, they must then provide the applicant or employee with the following information:

Name, address, and telephone number of the consumer reporting agency issuing the report
Statement that the consumer reporting agency was not the decision maker and can not explain why the adverse decision was made
Statement regarding the applicant or employee’s right to obtain a free disclosure of the report from the agency if the applicant or employee requests the report within 60 days of notice of the adverse action
Statement regarding the applicant or employee’s right to dispute directly with the consumer reporting agency the accuracy or completeness of any information provided by the agency.

Share this postShare on FacebookTweet about this on TwitterShare on Google+Email this to someone

Brenda Gonzales

Brenda Gonzales is the marketing specialist for Sarma. She is responsible for informing businesses and consumers about industry news and compliance information related to Debt Collections, Background & Tenant Screening, Mortgage Lending, and credit related issues. Brenda is also familiar with regulatory matters regarding CFPB, FCRA, FDCPA, FTA, and HIPPA.

More Posts

Follow Me:
TwitterFacebookLinkedIn

Categories: News & Press Releases

Leave a Comment