Legislative Update: Federal Trade Commission (FTC) – What Background Screening Companies Need to Know About the FCRA

The Federal Trade Commission (FTC) has issued new guidance to Background Screening Companies on what the law requires of them in relation to the Fair Credit Reporting Act (FCRA). Background Screening reports, known under the FCRA as consumer reports, may be factors in, “determining a person’s eligibility for employment, credit, insurance, housing, or other purposes and they include information “bearing on a consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living” – FTC. The companies who provide/sell consumer reports are known as Consumer Reporting Agencies (CRA) and these companies must meet a number of legal obligations outlined within the FCRA, specifically the following:

  1. Reasonable procedures are followed by the CRA to provide maximum accuracy in consumer reports
  2. CRAs must ensure that their clients provide certification of the following:
    a.) Lawful permissible purpose to receive consumer reports
    b.) Employer must notifying the applicant of the employers intent to acquire a consumer report
    c.) Employer must request and receive written permission from the applicant to receive a consumer report
    d.) Employer will comply with the FCRA requirements specified for end-users
    e.) Employer will not unlawfully discriminate against the applicant/employee as further outlined by the EEOC.

For further detailed information on the subject and also what employers need to know related to the FCRA, please view the following sources: