A CRAsh Course on Consumer Reporting Agencies

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As your trusted partner, we love updating our blog with information that helps you make informed employment decisions. When speaking with customers, we’re often asked about the laws surrounding Consumer Reporting Agencies and these laws affect employers, employees, and applicants. Of course, this is such an immense topic that we’ve decided to devote several upcoming blog articles to the subject. For today, here’s a quick intro and a sneak peek at what you’ll see in upcoming entries.

The Birth of the Consumer Reporting Industry

The consumer reporting industry arguably gets its start in 1899 when the first credit bureau—Retail Credit Company—was founded. While originally used to assess a person’s ability to repay debt, consumer reporting now also encompasses tenant screening, employment screening, insurance risk analysis, and more.

Due to the potential for background screens to be used unfairly to deny credit, housing, or employment, a number of regulations have been put in place to protect the subjects of a background investigation. The law refers to these individuals as consumers.

Introducing . . . The Fair Credit Reporting Act

The Fair Credit Reporting Act (FCRA) is the largest piece of consumer protection law. It acts as the foundation of consumer rights at the federal level. Both CRAs, and the companies that act as the end user of a consumer report must adhere to the rules of the FCRA. In addition to the FCRA, many states, counties, and municipalities have passed their own regulations. These regulations are designed to offer further protection to consumers from unfair background screening procedures.

Violations of consumer rights as provided by the FCRA and other consumer protection laws can lead to costly litigation. In 2016 more than $75 million was awarded to defendants who successfully argued violations of the FCRA. What’s worse, these violations are often reported in business news or national media, potentially damaging a company’s brand and ability to recruit qualified talent. This number is expected to rise in 2017 and 2018.

With the potential rise of litigation in mind, we’re dedicated to providing ongoing advice on how to fairly utilize consumer reports, and remain compliant with federal, state and local regulations. In upcoming posts we’ll present regulatory trends affecting the screening industry, and offer advice and best practices to comply with these regulations. We hope you like what you read, and find this information useful. Stay tuned for:

  • The importance of credit reports
  • The rise of “Ban the Box” legislation
  • Restricting the use of salary history when making employment decisions

If you want more information about any of our articles, or if there’s something you’d like us to write about please contact us at connect@acheckglobal.com.

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