This overview of the Fair Credit Reporting Act (FCRA) addresses requirements related to the employment background checking process and is provided only as general guidance for First Advantage customers. It is neither intended as legal advice nor as a sole educational tool for the employer's staff. The employer retains the responsibility to understand and educate its staff on the FCRA and the screening process. Because the information contained herein is general and is neither complete nor necessarily applicable to any specific set of facts or circumstances, please consult legal counsel for further guidance.

For a full copy of the FCRA and other useful information, visit the Federal Trade Commission's (FTC) Website.

For a full copy of the "Notice to Users of Consumer reports: Obligations of Users Under the FCRA" visit the link below:
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The FCRA was enacted to protect consumers in the consumer reporting process by regulating the report, the consumer reporting agency, and the employers/ end-users of the consumer reports. The FCRA requires employers to follow certain procedures when it uses a consumer reporting agency to obtain a consumer report. Such procedures can be divided into two categories: Report Ordering Procedures that employers must follow before ordering a consumer report, and Adverse Action Procedures that employers must follow if they intend to use any the information, in whole or in part, from the consumer report to take an adverse action.

REPORT ORDERING PROCEDURES
Although not required by the FCRA, it is a recommended practice to have the applicant show a form of picture identification to help verify his/her identity. This is especially important in some states such as California, Oklahoma or Minnesota where an applicant can elect to receive a copy of the consumer report during the consent process. The employer/end-user must take the following steps BEFORE ordering a consumer report from First Advantage:

STEP 1. CERTIFY TO FIRST ADVANTAGE
Specifically certify to First Advantage that it will: (i) provide a written disclosure and obtain a written authorization from the applicant; (ii) comply with the pre-adverse and adverse action procedures; and (iii) not use the consumer report in violation of any equal opportunity laws or any other laws.

STEP 2. PROVIDE DISCLOSURE TO APPLICANT
Provide a clear and conspicuous disclosure in writing to the applicant in a document that consists solely of the disclosure, stating that a consumer report may be obtained for employment purposes. This Disclosure must be in a separate document and cannot contain any additional information except for the consumer's authorization. Please note that the Disclosure cannot be made a part of any other form including the employment application.
Download PDF: Sample Disclosure

STEP 3. OBTAIN AUTHORIZATION FROM APPLICANT
Obtain written authorization from the applicant. As stated above, the Authorization may be obtained in the same document as the Disclosure, which is an exception to the general rule that the Disclosure must be in a separate document that consists solely of itself. In fact, some FTC opinions have found that having the Authorization on the Disclosure heightens the consumer's awareness to the Disclosure and furthers its purpose.

Therefore, one of the ways to comply with the Disclosure and Authorization requirements is to include the Authorization on the same document as the Disclosure but keep this combined document separate and apart from the employment application form. Another method of compliance is to use two separate documents, having the Disclosure by itself and the Authorization by itself.
Download PDF: Sample Authorization (self standing)
Download PDF: Sample Combined Disclosure and Authorization (identifying information can be obtained on an additional page).

ADVERSE ACTION PROCEDURES
Not only does the denial of employment fall under the FCRA definition of "adverse action", but also any other decision for employment purposes that adversely impacts any current or prospective employee will constitute an adverse action*.

STEP 4. PROVIDE APPLICANT PRE-ADVERSE ACTION DOCUMENTS
If the consumer report contains information, in whole or in part, that will negatively impact the employment opportunities of the applicant or employee the employer must provide all of the following BEFORE such an adverse action is made:

• A preadverse action notice,
• A copy of the consumer report; and
• A summary of rights the applicant has under the FCRA. This document is drafted by the FTC.

Download PDF: Summary of Rights Under the FCRA

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 notification before final determination is made or adverse action is taken. (There is an FTC opinion letter that deems 5 days as reasonable, but it will depend upon the particular facts and circumstances and whether the applicant has a reasonable opportunity to dispute any information that may be incorrect.*)
Download PDF: Sample Pre-adverse Action Letter

STEP 5. NOTIFY APPLICANT OF ADVERSE ACTION
If the applicant does not dispute the information after a reasonable period of time or if the information is correct, the employer may then take an adverse action (such as not employing the applicant)by providing the following in writing, orally or electronically* (First Advantage recommends written documentation.):

• A notice to the applicant of the adverse action *;
• The names, address and telephone number of the consumer reporting agency 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"; and,
• A notice of the applicant's right to obtain within sixty (60) days, a free copy of the consumer report from the consumer reporting agency and to dispute the accuracy or completeness of any information in a consumer report.