Fair Credit Report Act Responsibilities and Notices
Before requesting a consumer report or an investigative consumer report, you must provide the applicant with a clear and conspicuous written disclosure stating that you may request a report. The disclosure must be provided to the applicant in a separate document rather than hidden within an application form. In addition to the disclosure, you must obtain the applicant's written authorization to procure the report. While there is no requirement that the written authorization be separate from the job application, it must be conspicuous.
In circumstances involving current employees, a disclosure and authorization must also be procured unless the individual was previously notified and consented that the reports may be obtained during the course of employment.
When an investigative consumer report is desired, within three days of the report being requested, you must provide a written disclosure to the applicant or employee that includes a standard statement of his or her rights under the FCRA. You must also advise the applicant or employee of his or her right to request written disclosure of the nature and scope of the investigation.
Before obtaining a report, you must provide certification to the consumer reporting agency that your intended use is authorized under the FCRA - i.e., that you will be using the information for employment purposes (hiring, firing, reassignment, or promotion). Generally, consumer reporting agencies will request that you sign their certification agreement. Therefore, you should carefully review the agreement to ensure compliance with applicable federal and state laws.
Instructions for Pre-Adverse Action Obligations
If information in a consumer credit report influences your decision whether to hire, fire, reassign, or promote, before taking an adverse action you must provide the applicant or employee with (1) a summary of his rights under the FCRA, including the right to find out what the report contains and dispute inaccurate information, and (2) a copy of the report that influenced your decision. Once the applicant or employee is notified, he or she must be given the opportunity to correct or explain any information included in the report before you are permitted to take the adverse action.
The law is silent on how long you must wait before undertaking an adverse action after complying with your obligations. Generally, you should wait a reasonable amount of time (such as five days) between the pre-adverse action notice and final adverse action. The opinion letters also say that the facts of a particular situation will dictate the amount of time needed.
Pre-Adverse Action Notification
Dear Prospective Employee:
As you know, [COMPANY NAME] may use consumer reports in making its hiring decisions. You signed an authorization allowing [COMPANY NAME] to obtain a consumer report about you. You also received a statement of your rights under the Fair Credit Reporting Act.
[COMPANY NAME] has received a consumer report about you. Enclosed with this letter is a copy of that report. This report may be used in making a decision about your employment, and in fact, [COMPANY NAME] has concerns about the information contained in that report. By this letter, [COMPANY NAME] is providing you notice of your opportunity to correct and explain any information contained in that report before it takes any adverse action against you. We are also enclosing a copy of the summary of your rights under the Fair Credit Reporting Act which includes your right to find out what the report contains and dispute inaccurate information. Because of the nature of the employment action, we request that if you wish to respond, you do so as quickly as possible.
If you have any questions, please do not hesitate contacting me.
Very truly yours,
Instructions for Notice of Adverse Action
Once you have provided the applicant or employee with a copy of the report and summary of rights under the FCRA and waited for a reasonable amount of time, you may take adverse action. You must once more give the applicant or employee notice of the adverse action, either orally, in writing, or electronically. Written notifications are strongly encouraged because they help to show compliance with the FCRA.
The adverse action notification must include:
- the name, address, and telephone number of the consumer reporting agency that supplied the report (including a toll-free telephone number established by the agency if the agency compiles and maintains files on consumers on a nationwide basis);
- a statement that the consumer reporting agency didn't make the decision to take the adverse action and is unable to provide the applicant or employee with the specific reasons the adverse action was taken;
- a statement that the applicant or employee may dispute the accuracy and completeness of any information in the report with the consumer reporting agency; and
- a statement that sets forth the applicant's or employee's right to obtain free disclosure of her file from the consumer reporting agency within 60 days of a request for the report.
Draft Notice of Adverse Action
[COMPANY NAME] has decided not to offer you employment. It based its reasons in part on a consumer credit report. Under the law, you have certain rights relating to that consumer report which we have previously provided to you.
The consumer report was obtained from Lexis/Nexus whose address is ______ and telephone number is (800) . The consumer reporting agency did not make the decision about your employment and is unable to provide you with the specific reasons for the adverse action. However, under the law you may dispute the accuracy or completeness of any information contained in the report with the consumer reporting agency. Further, you have the right to obtain free disclosure of your file from the consumer reporting agency within sixty (60) days of a request for that report.
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