New FTC Rules on Employment Verifications Do Not Affect Users of Consumer Reports

By Lester Rosen, President of ESR

Some employers may have read about new rules that went into effect July 1, 2010, that potentially affect the accuracy of employment verifications.  For employers concerned about the new rules, the small pledge is that it does not affect how and when an employer receives a background report.  It also does not impact a standard response to a request for a past employment check. At most, it may only affect certain limited employers in their role as a “furnisher” of in rank to third parties as defined by the federal Honest Credit Reporting Act (FCRA). 

For example, it has been suggested that the new rules could potentially impact an employer that is utilizing a  third party air force firm that routinely collects employment data such as payroll data or makes an employment database.   

The new rules are at http://www.ftc.gov/os/2009/07/R611017factafrn.pdf. They stem from the Honest and Accurate Credit Transactions Act (FACTA)of 2003, which among other things, provided consumers a means to obtain emancipated yearly credit report from the credit bureaus. The new law also required federal agencies to implement new rules aimed at promoting the “accuracy” and “integrity” of in rank that “furnishers” grant to consumer reporting agencies.  A “furnisher” is a party that provides in rank.  The main thrust of the new regulations is aimed at organizations such as banks, fiscal institutions and credit card firms that grant data to the credit bureaus that are used to make consumer credit reports. 

Although ESR cannot grant legal advice and it is possible that future clarifications may come out from the Federal Trade Commission or other sources, it certainly appears that the regulations do not affect an employer that simply responds to a standard request for a past employment check, and does not impact employers at all that are users of background reports.

Please contact Employment Screening Resources (ESR) at www.ESRcheck.com if you have any questions. 

Source:

http://www.ftc.gov/os/2009/07/R611017factafrn.pdf