At InfoMart, we realize that providing our clients with accurate, detailed profiles and rapid turnaround doesn't do our clients - or ourselves - any good if our practices are not 100 percent legal. Therefore, keeping ourselves apprised of and in compliance with all federal and state legislation applicable to our business is an ongoing priority.
The following information is provided as a courtesy to our customers and is not intended as legal advice. This information addresses the changes in the FCRA amendment and how they pertain to reports ordered for employment purposes.
The Fair Credit Reporting Act (FCRA) was last amended on December 4, 2003. The amendments are intended to assure that consumer reporting agencies and users of consumer reporting agencies adopt reasonable procedures for the accurate and confidential handling of information relating to consumer credit, personnel, insurance, and other information in a manner which is fair to the consumer.
There are two types of reports covered by this law:
- Consumer Report is any written, oral or other communication of any information by a consumer reporting agency (InfoMart) bearing on a consumer's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living used in whole or in part as a factor in establishing a consumer's eligibility for credit, employment, insurance or other benefits. These are "Records Only" type reports which do not include interviews with current or former employers, schools or other institutions, or business or personal references.
- Investigative Consumer Report is a consumer report that contains information bearing on the consumer's character, general reputation, personal characteristics, or mode of living OBTAINED THROUGH PERSONAL INTERVIEWS WITH FRIENDS OR ASSOCIATES OF THE CONSUMER. These are reports that contain interview information from current or former employers, schools or other institutions, or business or personal references.
Consumer reporting agencies (InfoMart) may furnish a consumer report or an investigative consumer report, under these circumstances and no other:
- In response to a court order or subpoena
- For employment purposes
- In connection with a credit transaction
- For underwriting of insurance
- For eligibility for a license or other government benefit
- As a potential investor or insurer
- With written authorization from the consumer to whom it relates
- In response to state or local child support enforcement agency
When Consumer Reports or Investigative Consumer Reports are being used for employment purposes, InfoMart must obtain certification from the user (employer) that states:
- Their purpose for requesting the report (i.e., for employment purposes) and that they will use the information only for that purpose.
- That the user (employer) will comply with the new disclosure requirements (including adverse action provisions).
- That the information will not be used to violate any federal or state Equal Employment laws or regulations.
Our Service Agreement will contain this certification language.
Disclosure Requirements of Consumer Reports:
The consumer must be pre-notified by the employer (via a written, stand-alone document) that a consumer report is being obtained for employment purposes. Please note that notification language that appears on an application for employment is not acceptable. This document must be given to the consumer before the consumer report is requested from InfoMart. The consumer must provide his/her written authorization before the report is requested.
Note: The employer does not have to pre-notify or obtain written consent from the employee if the employee is under investigation for a violation of workplace security.
Disclosure Requirements of Investigative Consumer Reports:
If you use investigative consumer reports, you must:
- Disclose to the consumer that an investigative consumer report, including information as to his/her character, general reputation, personal characteristics, and mode of living, may be made. This disclosure must be in writing and mailed or otherwise delivered to the consumer not later than three days after the report was requested.
- The disclosure must also include a statement informing the consumer of his/her right to request additional disclosures regarding the nature and scope of the investigation requested.
- You must also provide a written summary of the consumer's rights as prescribed by the Federal Trade Commission.
If the consumer exercises his/her right to additional disclosure regarding the nature and scope of the investigation, the employer must make a complete and accurate disclosure of the nature and scope of the investigation. This additional disclosure shall be made in writing and mailed or otherwise delivered to the consumer not later than five days after the date the request for additional disclosure was received or the date the report was first requested, whichever is the latter.
If you are unable to obtain a consumer report without an authorization, previous law is now amended to say that: An employer may no longer order or use an investigative consumer report for retention or promotion purposes without the consumer's written authorization.
If an employer INTENDS to take adverse action (i.e., denial of employment) based on any information in the consumer report or the investigative consumer report, they must first provide the consumer with:
- Notification of the company's intent
- A copy of the report
- A description, in writing, of the consumer's rights as prescribed by the Federal Trade Commission (FTC).
InfoMart will provide to the employer a
summary of the consumer's rights as prescribed by the FTC.
Requirements on Users of Consumer Reports or Investigative Consumer Reports: If an employer TAKES adverse action based on any information in the report, they must:
- Notify the consumer of the adverse action (most often a decision not to offer employment). This notification can be orally, in writing or electronically delivered.
- Provide the name, address and toll-free telephone number of the consumer reporting agency (InfoMart).
- Provide a statement that the consumer reporting agency did not make the adverse decision and cannot provide the reason for the decision.
- Provide notice of the consumer's rights to obtain a free report within 60 days and to dispute the accuracy with the consumer reporting agency.
Reports may not contain adverse information more than seven years old, except that:
- Orders of relief (bankruptcies) may be reported for ten years;
- Arrests, records of arrest, and records that did not result in a conviction may be reported for seven years after disposition, release or parole; and,
- There are no limitations on reporting adverse information older than seven years (10 years for bankruptcy) if the individual's annual salary is $75,000 or more. This is an increase from the existing salary requirement of $20,000 or more.
* Note that certain state laws may supercede the FCRA guidelines.
- Any person who willfully fails to comply with the FCRA is liable to the consumer for any actual damages sustained by the consumer of not less than $100 and not more than $1,000.
- An individual knowingly obtaining a report under false pretenses or knowingly without a permissible purpose, is liable for actual damages sustained by the consumer as a result of the failure or $1,000, whichever is greater.
- Any person who obtains a consumer report from a consumer reporting agency under false pretenses or knowingly without a permissible purpose shall be liable to the consumer reporting agency for actual damages sustained by the consumer reporting agency or $1,000, whichever is greater.
- Negligent noncompliance results in liability to the consumer of actual damages, costs and attorney's fees.
In an effort to keep state and federal law consistent, only regulations that provide greater consumer protection than existing law are permitted. With some exceptions, the FCRA amendments will take the place of state legislation in some of the following areas:
- Time frames and notification procedures in cases of disputed accuracy (section 611).
- Duties required of those who take adverse action (section 615 (a) and (b)).
- Obsolescence periods under section 605.
- Consumer disclosure form and substance.
Please be aware, however, that those state laws governing time frames and notification procedures in cases of disputed accuracy and obsolescence periods that are in effect as of the date of enactment of the amendment may still apply.
