What is the Fair Credit Reporting Act (FCRA)?
The Fair Credit Reporting Act (FCRA) is a federal law (15 U.S.C. § 1681 et seq.) that regulates the collection, dissemination, and use of consumer information, including consumer credit information. Almost any type of background check that an employer requests from Achievement Tec to be used in the hiring process is considered a consumer report. In addition, Achievement Tec is considered a Consumer Reporting Agency. Employers must follow all FCRA requirements in order to remain in compliance. This page will provide a summary of information that is helpful to employers when using consumer reports for employment purposes.
What is a “Consumer Report”?
According to the FCRA, a consumer report is “any written, oral, or other communication of any information by a consumer reporting agency bearing on a consumer's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living which is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer's eligibility for…employment purposes.”
Employment purposes may include hiring, promotion, reassignment or retention.
In addition to consumer reports, there is another type of report called an investigative consumer report. An investigative consumer report “means a consumer report or portion thereof in which information on a consumer's character, general reputation, personal characteristics, or mode of living is obtained through personal interviews with neighbors, friends, or associates of the consumer reported on or with others with whom he is acquainted or who may have knowledge concerning any such items of information.” Examples of this type of consumer report are personal references or employment verifications that include information related to the employee’s performance, attitude, character, etc.
As you can see, the FCRA not only governs credit information, but also other consumer reports such as criminal court records, driving records, and employment verification.
Requesting Consumer Reports
Before a consumer reporting agency such as Achievement Tec may provide or prepare a consumer report for an employer, it must obtain certification from the employer that the employer (1) provided the required disclosure to the applicant/employee, (2) received written permission to obtain the report, (3) will not use the information in violation of any applicable equal employment opportunity law or regulation, and (4) will abide by the requirements stated before taking any adverse employment action.
Achievement Tec will obtain certification from each end-user/client during the account setup process that all of the requirements will be adhered to. We will also determine what the end-user’s permissible purpose is for requesting consumer report, which, in this case, is employment purposes. Reports may be acquired and used for no other reason than the stated permissible purpose.
In addition, we must provide each end-user/client with a copy of the Notice to Users of Consumer Reports. Each client should read and be familiar with the contents of this document.
Before an employer may obtain a consumer report or cause one to be prepared, it must disclose to that person in writing that such a report may be obtained and secure the person's written authorization. This written disclosure must be contained in a separate document used solely for that purpose, and it may not simply be included on an employment application or in an employee handbook. Per the FTC, the disclosure and written authorization may be included in the same document.
If an employer wishes to obtain an investigative consumer report, it must follow the requirements discussed above with respect to consumer reports and meet the following additional requirements:
Achievement Tec will provide each end-user with FCRA-compliant forms that may be used to procure consumer and/or investigative consumer reports on applicants/employees.
Using Consumer Reports
Before taking any “adverse action” (which includes “a denial of employment or any other decision for employment purposes that adversely affects and current or prospective employee”) based in whole or in part on a consumer report, an employer must provide the affected person with a copy of the report and a written description of that person's rights under the FCRA. This allows the consumer to review the information and, if they feel the information is inaccurate or incomplete, dispute the information in the consumer report.
The FTC has taken the position that the legislative history of the FCRA clearly anticipates that this notice will be accompanied by an opportunity to clear up any errors in the report. The FCRA, however, does not require employers to refrain from taking any action based on a negative report once the notice has been given.
After taking any adverse action, the employer again must notify the consumer that adverse action has been taken based in whole or in part on a consumer report. Further, the employer must provide the individual with:
Adverse Action Assistance
To help employers maintain compliance with the requirements of the FCRA, we offer Adverse Action Assistance. If you notify us when you intend to take adverse action against an applicant or employee, based on a consumer report or an investigative consumer report, we will send all of the legally required information to the candidate via USPS certified mail within 24 hours of your decision.
What do we send?
All of these steps must be completed to be in compliance with the FCRA. At a nominal fee, we can assure you that every step in the compliance procedure will be carried out.
Fair Credit Reporting Act (FCRA) - full text
Fair and Accurate Credit Transactions Act (FACT Act) - full text. The FACT Act is a 2003 amendment to the FCRA.
State Consumer Reporting Laws
In addition to the federal FCRA, employers must also be aware of state consumer reporting laws that govern the use of consumer reports. Many states have enacted legislation regarding consumer reports that may be more restrictive than federal law. We suggest you consult your legal counsel to determine if your policies and procedures are compliant.
The following information is provided as a convenience to consumers who may have questions about a background check that was procured by Achievement Tec.
FACT Act Information
The Fair and Accurate Credit Transactions Act (FACT Act) of 2003 provides that all consumers are entitled to obtain a free copy of their consumer report from certain consumer reporting agencies once during a 12 month period. If Achievement Tec has procured a consumer report on you, you may request a copy of your report pursuant to the Free Annual File Disclosure Rule.
Please note that Achievement Tec will only have a consumer report on you if you have applied for employment or tenancy with an employer or landlord who performs background checks AND the background check was performed by Achievement Tec. Otherwise, Achievement Tec will NOT have a file for you.
Achievement Tec does not re-use any information that was obtained for a consumer report. Each report is for one-time use only. Any subsequent requests for a consumer report are re-run at the time of request.
To request a copy of your free report, please contact us in one of the following ways:
Please be aware that we must take reasonable measures to confirm your identity when supplying a consumer report. You will be asked for your full name, social security number, date of birth, phone number and email address, as well as the name of the employer or landlord who initially requested the consumer report.
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