The FTC has released new guidance aimed at helping companies that conduct background screenings for employment purposes to determine whether they are "consumer reporting agencies" within the meaning of the federal FCRA. Pointing to the broad statutory definition of "consumer reports," the guidance helpfully notes that many companies that provide information about people to employers for use in hiring and other employment decisions are, in fact, consumer reporting agencies covered by FCRA.
The guidance provides a concise summary of FCRA's key requirements for consumer reporting agencies, including:
- Establishing and following reasonable procedures to assure the accuracy of the information provided in the consumer report;
- Obtaining certifications from clients establishing that (1) they will only use consumer reports for employment purposes, (2) they have complied with FCRA's requirements, including by giving notice to and obtaining authorizations from the applicants and employees who are subjects of the consumer reports, and (3) they will use the information in consumer reports in accordance with equal opportunity laws;
- Providing clients with information about FCRA's requirements, including two standard form notices prepared by the Consumer Financial Protection Bureau addressed to users of consumer reports and consumers who are the subjects of consumer reports; and
- Upholding the rights of individual consumers under FCRA, such as the rights to access their files and dispute the accuracy of information held about them.
A copy of the guidance may be found here.
Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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