Four Basic Steps to FCRA Compliance

Step 1: Disclosure & Written Consent

Before requesting a consumer or investigative report, an employer must:

  1. Provide the applicant with a clear and conspicuous disclosure that a report may be requested. This must be provided in a separate document that does not refer to other subjects.
  2. Obtain prospective written authorization from the applicant.

Step 2: Certification To The Consumer Reporting Agency

Before obtaining a consumer report, the employer must provide certification to the consumer reporting agency retained (The McDowell Agency, Inc.) to produce the report. Most, if not all, consumer reporting agencies will request that the employer sign their certification agreement. This certification agreement is the FCRA Agreement.

Step 3: Provide Applicant With Pre-Adverse Action Documents

Any decision made upon the results of a consumer background report that adversely affects a current or prospective employee for employment purposes constitutes an adverse action.

If a consumer report provides information that will in whole or in part negatively influence the employment opportunities of an applicant you must do all of the following before an adverse action is taken:

  1. Provide the applicant a copy of their consumer report.
  2. Provide the applicant a written description of their rights under the Fair Credit Reporting Act (FCRA) as prescribed by the FCRA by the Federal Trade Commission (FTC). This document has been provided to the employer titled “A Summary of Your Rights Under the Fair Credit Reporting Act” by The McDowell Agency, Inc. to be given to all applicants prior to submitting the background screening request.
  3. Provide the applicant a letter explaining this process. A sample Pre-Adverse Action letter has been provided to the employer by The McDowell Agency, Inc.

This pre-adverse action process allows the applicant the chance to dispute the negative information in the report. The employer should allow a reasonable amount of time for the applicant to respond to this pre-adverse action notification before final determination is made or adverse action is taken (there is an FTC opinion letter deeming five days reasonable).

Step 4: Notify Applicant Of Adverse Action

If you decide to take adverse action based in whole or in part on the information revealed in the consumer report, you must do the following in writing, orally or electronically (The McDowell Agency, Inc. recommends written documentation):

  1. Provide notice to the applicant of the adverse action.
  2. Provide the applicant the name, address and telephone number of The McDowell Agency, Inc. and a statement that “the consumer reporting agency did not make the decision to take the adverse action and is unable to provide the applicant the specific reasons why the adverse action was taken.”
  3. Provide notice to the applicant of his/her right to obtain, within 60 days, a free copy of the consumer report from The McDowell Agency, Inc. and to dispute with The McDowell Agency, Inc. the accuracy or completeness of any information in a consumer report furnished by The McDowell Agency, Inc.
  4. Provide the applicant a letter explaining this process. A sample Adverse Action letter has been provided to the employer by The McDowell Agency, Inc.