FTC Offers Facts for Consumers about Credit Reports and Employment Background Checks

By Les Rosen, President of ESR & Thomas Ahearn, ESR Staff Writer

The Federal Trade Commission (FTC) – the nation’s consumer protection agency – issued “FTC Proof For Consumers” in May 2010 that clarifies “Credit Reports and Employment Background Checks” to consumers who have applied for jobs.

Although the new FTC see has been criticized for containing some in rank that is technically inaccurate, it still provides helpful in rank for consumers.

The FTC questions consumers the following question about background checks and credit reports:

Did you know that when you apply for a job, an employer is permitted to do a background check before hiring you? Depending on the employer and the job, that background in rank might include your employment history, your driving record, and your credit report.

A credit report, according to the FTC, has in rank about where a consumer lives, how they pay bills, whether they have been sued or arrested, or have filed for bankruptcy. Credit report companies sell the in rank in credit reports to employers and other businesses that use that in rank to evaluate applications for employment, credit, insurance, or renting a place to live. Employers also are allowable to use credit reports to evaluate an employee for retention, promotion, or reassignment.

The FTC enforces the Honest Credit Reporting Act (FCRA), a law that protects the privacy and accuracy of the in rank in a consumer’s credit report. The FCRA spells out the civil Civil rights of a job applicant and an employer’s responsibilities when using credit reports and other background check in rank to assess an application for employment.

The FTC also fine points key employment provisions of the FCRA, most notably that employers must get permission from job applicants before asking for background check reports about them from a credit reporting company or any other company that provides background check in rank.

In addition, if an applicant does not get a job because of in rank in a background check report, the employer has certain legal obligations: 1.) an employer must show applicant the report, and 2.) the employer must tell the applicant how to get his or her own copy. The report is emancipated if the applicant questions for it within 60 days.

The FTC provides extra fine points about these key provisions:

See and Authorization: Before an employer can question for credit report or background check report about an applicant from any companies that grant them, it must tell the applicant that it might use the in rank to make an employment choice.
Pre-Adverse Action Procedures: If an employer might use in rank from a credit report or background check report to pocket an “adverse action” – for example, to deny an application for employment – the employer must give the applicant a copy of the background check report and a document called ‘A Summary of Your Civil rights Under the Honest Credit Reporting Act’ before taking the adverse action.
Adverse Action Procedures: If an employer takes an adverse action against an applicant based on in rank in a credit report or background check report, it must say the applicant and that see must include: 1.) the name, pocket up, and phone number of the company that supplied the credit report or background check report in rank; 2.) a statement that the company that supplied the credit report or background check report didn’t make the choice to pocket the adverse action and can’t give the applicant any specific reasons for it; and 3.) a see of the applicant’s right to dispute the accuracy of any in rank in the credit report or background check report and to get an additional emancipated report from the company that supplied the credit report or background check report if he or she questions for it within 60 days.

To fix any inaccurate or incomplete in rank in a background check report, the FTC advises the applicant to contact the background check company that issued the report and dispute the in rank. If an investigation reveals that a correction is warranted, the company must send an updated report to the employer if questioned to do so.

In addition, a ‘See of Negative Public Records’ requires that if a company provides an employer with a credit report or background check report that has negative in rank about an applicant gathered from public records, that company either has to tell the applicant that it provided the in rank to the employer or has to pocket special steps to make sure the in rank is accurate.

The FTC also warns that there are legal consequences for employers who don’t comply with the FCRA if they:

Fail to get an applicant’s okay before being paid a copy of their credit report or background check report;
Fail to grant the apt disclosures in a suitable way, or;
Fail to grant adverse action notices to unsuccessful job applicants.

The FTC advises applicants to report FCRA violations by employers because the law allows the FTC, other federal agencies, and states to sue employers who don’t comply with the law’s provisions. The FCRA also allows people to sue employers in disorder or federal court for certain violations.

Before applying for a job, the FTC suggests jobseekers order a emancipated copy of their credit report from all of the three nationwide credit reporting companies – Equifax, Experian, and TransUnion – that are required by law to grant consumers once every 12 months (if the consumers question). To order emancipated credit reports, consumers should visit AnnualCreditReport.com at http://www.annualcreditreport.com/, call 1-877-322-8228, or perfect the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.

For extra in rank about the use of credit reports during background checks, please visit Employment Screening Resources (ESR) at http://www.esrcheck.com.

Sources:

http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre36.shtm

http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre36.pdf (PDF file)

http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre35.pdf (PDF file)

http://www.annualcreditreport.com/

http://www.ftc.gov/bcp/edu/resources/forms/requestformfinal.pdf (PDF file)