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What is the Fair Credit Reporting Act (FCRA)?


The Fair Credit Reporting Act, which is enforced by the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB), provides the guidelines employers need to follow when performing employment screening. The FCRA requirements apply whenever an employer requests a "consumer report" or "investigative consumer report" from an agency such as Info Cubic. A "consumer report" includes any written, oral or other communication of any information by a consumer-reporting agency regarding an individual's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics or mode of living which is used as a factor to establish eligibility for employment.The FCRA requires that employers must comply with certain reporting requirements when using an agency to screen employees or applicants. To obtain a report for employment purposes, the employer must first provide certification to the consumer-reporting agency that they:

  1. Have provided the required disclosure to the applicant or employee.
  2. Have obtained the necessary written authorization to request the report.
  3. Will comply with all Adverse Action requirements before taking any adverse action based in whole or in part on the report.
  4. Will not use the information from the report in a manner that violates federal or state equal opportunity laws.

A copy of "A Summary of Your Rights Under the Fair Credit Reporting Act" must also be provided to the consumer.

The FCRA requires any employer intending to obtain a consumer report to first make a clear and conspicuous written disclosure to the applicant or employee that a consumer report may be obtained for employment purposes. The disclosure cannot be included in an employment application or other document that contains additional information.

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