Keeping a Close Eye on Compliance:

FCRA Disclosure and Authorization Forms

No doubt, you already know the Fair Credit Reporting Act (FCRA) has strict regulations in place to govern your pre-employment background screening process—and that failure to meet these regulations when screening your candidates can quickly get you into some pretty expensive legal trouble. It’s no secret that class action attorneys, year after year, continue to pursue employers and Consumer Reporting Agencies that are not in strict compliance with FCRA requirements.

Before we get too much further, let’s take a quick look at why these regulations are in place to begin with.

The FCRA was enacted to help ensure consumer protection

Short and simple. It’s about the privacy of consumer information—knowing what information is collected, and how that information can be used by lenders, credit issuers, and yes, even employers. During background screening, this protection also extends to information like criminal/arrest records.

In short, if you’re a U.S.-based business, of any size, public or private, your pre-employment background screening program is subject to FCRA regulation compliance.

Two important requirements: FCRA Disclosure and Authorization

Employers must begin all candidate background screening with two critical steps:

  • Disclosure: You must properly inform candidates that you will be performing a background screen
  • Authorization: And, you much obtain the candidate’s permission for this background screen

Let’s take a closer look at what is required for both.

Disclosure: Clearly notifying candidates that you intend to perform background screening as part of a wholly informed hiring decision. This disclosure must be clear (direct language, easy to understand), conspicuous (prominent, not deeply embedded in other forms or fine print), and presented as a stand-alone document.

Authorization: Also as a self-contained document, a clear candidate acknowledgement that background screening will be conducted as a pre-employment requirement. This can be presented jointly with the Disclosure, but must be on two separate and printable pages. As part of the authorization, the client will also acknowledge that the company is an equal-opportunity employer and follows all fair hiring practices.

That said, what can go wrong? Well . . . without close attention, a lot!

At most risk, improperly worded presented background check disclosure and authorization forms that do not follow FCRA requirements to the letter are magnets for class action litigation. Like we mentioned above, the FCRA requires clear, conspicuous disclosure as well as candidate written authorization prior to performing a background screen employment. Furthermore—and this is detail attorneys are embracing—FCRA requires the disclosure and authorization forms exist as stand-alone documents. (FCRA section 604(b)(2)).

It is the End User’s responsibility to manage the forms they provide to candidates. Disclosure and authorization forms can typically be signed physically or electronically. However, your company or organization should always consult with your legal team to confirm you are utilizing the appropriate forms, as FCRA regulations evolves over time, as does state-by-state legislation.

A-Check Global has consistently communicated the importance of disclosure and authorization form compliance to our clients. While U.S. employers are ultimately responsible for ensuring their hiring practices comply with federal and state requirements, we’re here to help.

Ask us about our FCRA Form Tool Kit

We offer a convenient Authorization for Background Investigation Form Kit which helps make it easier to comply with FCRA and applicable state-by-state requirements. Our document includes all the components necessary to customize your Forms.

For more information and access to this Tool Kit, please contact us at clientsupport@acheckglobal.com or 1-877-345-2021.

FCRA Compliance More Important Now than Ever For U.S. Employers

Large Law Firms in the United States specializing in class action claims have discovered a lucrative revenue stream – Employers that violate the Fair Credit Reporting Act (FCRA), the federal legislation that outlines the process for obtaining and utilizing consumer reports.

There have been an estimated 27 such class action lawsuits in 2014 – close to 40 over the last three years – regarding violations of the FCRA. The majority of these lawsuits are attributed to failures in two important steps in the process – Authorization and Adverse Action. Continue reading “FCRA Compliance More Important Now than Ever For U.S. Employers”

Join A-Check for a Complimentary Educational HR Luncheon: Best Practices for a Compliant Background Screening Process For Nevada Employers

Join A-Check & AppleOne Employment Services for a Special Complimentary Luncheon Presentation: “There’s No Place Like Work: Best Practices for a Compliant Background Screening Process For Nevada Employers”
Continue reading “Join A-Check for a Complimentary Educational HR Luncheon: Best Practices for a Compliant Background Screening Process For Nevada Employers”

Updated Notice to End Users of Consumer Reports – For Employers Using our Services

Obligations of Users of Consumer Reports Under the FCRA

The Fair Credit Reporting Act (FCRA), 15 U.S.C. §1681-1681y, requires that this notice be provided to inform users of consumer reports of their legal obligations. State law may impose additional requirements.

Read here: Notice to Users of Consumer Reports: Obligations of Users Under FCRA

The text of the FCRA is set forth in full at the Consumer Financial Protection Bureau’s (CFPB) website at www.consumerfinance.gov/learnmore.

Information about applicable regulations currently in effect and other information about user duties is also available at the CFPB’s website. Users must consult the relevant provisions of the FCRA for details about their obligations under the FCRA.


Consumer Financial Protection Board (CFPB) to Take Over FCRA Enforcement from FTC

FCRA Enforcement ad Interpretation Responsibility Shifting from FTC to CFPB

Beginning January 1, 2013, the responsibility of interpreting and enforcing requirements under the FCRA will shift from the Federal Trade Commission (FTC) to the Consumer Financial Protection Board (CFPB).

The following forms will be required to be modified by that date to comply with new regulations set forth by the Consumer Financial Protection Board (CFPB):

  1. Fair Credit Reporting Act (FCRA) Summary of Rights: This is a standard notice provided to subjects of background screening reports before the process (issued by the employer) and after the process with the copy of their report when requested (provided by the Background Screening Company) detailing the consumer’s rights under the FCRA. Additional situations for issuance of this document include when a pre-adverse action notice is sent by the employer to an applicant or employee. A-Check’s report generated by A-Check will contain the updated FCRA Summary of rights on or before the deadline of January 1, 2013.
  2. Notice to Users of Consumer Reports of their Obligations under the FCRA: This is the document provided to each individual user of background screening reports by the background screening company outlining the guidelines for the compliant use of background screening reports. The updated notice will be posted on the ACD login page.
  3. Notice to Furnishers of Information of their Obligations under the FCRA: This document is provided to researchers and other types of information brokers by the background screening companies in specific situations. This notice will be provided individually to A-Check suppliers.

Since the inception of Background Screening, the Federal Trade Commission has been the agency responsible for interpreting the FCRA, however the Dodd-Frank Wall Street Reform and Consumer Protection Act (Pub. L. 111-203, H.R. 4173), which was signed into law by President Obama on July 21, 2010, transferred rulemaking authority for the FCRA to the CFPB. The newly created CFPB has now become the agency primarily responsible for interpreting the FCRA.

A-Check America is currently developing our strategy to comply with this new regulation well before the January 1, 2013 deadline.  A-Check Documents will be revised and distributed to each our clients in a timely manner to ensure their own compliance.  In the meantime, if you have any questions, please feel free to contact our Compliance Department 877-345-2021 or by email at compliance@acheckamerica.com.

For a quick read from Labor Attorneys at Seyfarth Shaw detailing the effect of this change, please read the One Minute Memo – New FCRA Forms will be Required by January 1, 2013 (PDF) by Pamela Q. Devata and Natascha B. Riesco.