Details of an FCRA Background Check

Background checks deal with a considerable amount of personal information that can be subjected to misuse in the hands of individuals who have bad intentions. A federal law in the United States – the Fair Credit Reporting Act or FCRA has been implemented to prevent this.

The FCRA was enacted to protect the rights of the individuals while allowing companies and other such agencies to look into their background records. This act regulates the actions of the credit reporting agencies and the consumer reporting agencies that report to it.

The consumer reporting agencies also known as the CRAs, which comply with the rules of the Fair Credit Reporting Act, need to follow a set of rules while conducting the background checks. These rules require the compliance of both the agency, party or company  that  requires to conduct the background check as well as the individual whose background check is been done.

FCRA: Provision and Amendments

In the initial stages, there were a lot of controversies over the background checks because while every person had the right to argue over personal details that were included in their background records, they could not view the details of the background checks that the CRAs provided. So the individuals had no way to correct any inaccurate information contained in their background check. However this was changed after the enactment of the FACTA or Fair and Accurate Credit transaction Act. The FACTA is an extension of the FCRA.  With the enactment of this act, the individuals now have the right to view the CRA report as well as receive a copy of their background check that was sent to the company that had requested for conducting the background check.

Regulations for the Employment Screening Purpose

Companies that require to conduct background checks for the purpose of hiring, suspension, promotion or for termination purposes  need to be acquainted with the procedure of ‘adverse action’ under the FCRA. The FCRA considers the decisions of the, employers that base their decisions regarding the employment on the basis of a background check report that has the capacity to harm the prospects of a current or a potential employee to be considered as ‘adverse action’ decisions. Decisions based on ‘adverse action’ require certain conditions to be fulfilled such as requirements for sending specific notification to the concerned individuals.

Under the rules of the FCRA, the company or the employer has to send two notices to the concerned individual regarding the decisions based on ‘adverse action’. The first notice is referred to as the ‘Pre- Adverse Action’ Letter and the second notice is referred to as the ‘Adverse Action’ Letter Section 604 of FCRA requires that employers should send to the employee or a potential employee, a copy of the CRA’s background check report along with the summary of the rights that an individual enjoys under the FCRA.

 The employer has to send this before taking any employment decision that is based on ‘adverse action’. As this notification is sent before acting on the ‘adverse action’ decision, it is referred to as the ’Pre-Adverse Action’ Letter. The employer sends this notification to the concerned employee if he/she feels that the background check report can have a negative impact on their employment decisions. Upon receiving the ‘Pre- Adverse Action ‘Letter, the employee has 5 business days to review, discuss and correct any inaccurate information contained in the background check report.

The second notice or the “Adverse Action “Letter is sent to the concerned employee after the ‘adverse action’ decision has been taken by the company.

The FCRA background check is an important part of the employee screening procedure that is used by companies in the United States. If you wish to know more about the guidelines of the FCRA and how an FCRA background check can affect your employment opportunities, you can visit at: http://www.ftc.gov/bcp/edu/pubs/business/credit/bus08.shtm

Additional FCRA Background Check Information:

Credit Report

Employment Background Check

Business Background Check