What is the FCRA?
Updated: Jun 10, 2022
The Fair Credit Reporting Act (FCRA) is often thought to only apply to credit, a fair assumption given its title, but the FCRA covers more than just consumer credit. The FCRA governs consumer reporting agencies (CRA) including credit bureaus, medical information companies, and background screening companies. The Federal Trade Commission (FTC) along with the Consumer Financial Protection Bureau (CFPB) are responsible for enforcing the FCRA. According to the FTC site, “Information in a consumer report cannot be provided to anyone who does not have a purpose specified in the Act. Companies that provide information to consumer reporting agencies also have specific legal obligations, including the duty to investigate disputed information. In addition, users of the information for credit, insurance, or employment purposes must notify the consumer when an adverse action is taken on the basis of such reports.”
Originally enacted October 26, 1970, the intent of the Act was to promote accuracy and fairness while preserving privacy in the use of consumer information. Since then, there has been much debate and some efforts to make changes to the Act. On September 30, 1996, after many years of debate, The Consumer Credit Reporting Act was passed which revised many sections of the FCRA. In 2003, the FACT Act (Fair and Accurate Transactions Act) was passed, giving further amendments to the FCRA. The FACT Act aims to improve accuracy of consumers’ credit related records; and to further protect consumers personal information.
Interpretation of the FCRA has been shaped by case law. As it relates to background screening, suits have been brought against employers challenging the use of unverified records, inconspicuous disclosure forms, adverse action, and other provisions easily overlooked or misunderstood by employers and even by some CRAs.
It is important for employers to partner with a credible background screening company who has its finger on the pulse of current litigation and the evolving interpretations of the FCRA. This area of law is very specific and not an area of focus for even most employment law attorneys. Integris partners with Seyfarth, a premier law firm in the area of employment law, to stay up to date with current litigation and case law affecting the use of background checks. This is how we ensure our policies and procedures help protect our clients from costly litigation.
Shane is the Director of Marketing for Integris. With over a decade of experience in the background screening industry, he holds an advanced FCRA certification from the Professional Background Screening Association.
The information provided is not intended to constitute legal advice and is for informational purposes only. Employers are strongly advised to consult with legal counsel on matters related to the Fair Credit Reporting Act.