FTC Testimony: Fair Credit Reporting Act & the Use of Consumer Reports in Employment

(Source: FTC) - The Federal Trade Commission submitted written testimony to the U.S. Commission on Civil Rights regarding the Fair Credit Reporting Act (FCRA) and the use of consumer reports in employment.

The Fair Credit Reporting Act promotes the accuracy, fairness, and privacy of information in the files of consumer reporting agencies (CRAs). The FTC testimony describes some of the legal rights and obligations prescribed by the FCRA when consumer reports are used for employment purposes, including the following:

CRAs must have reasonable procedures to assure maximum possible accuracy of reports;
CRAs must notify employers of their obligations under the FCRA;
Employers have to obtain the written consent of applicants and employees before using consumer reports for employment purposes;
Employers must provide notice to applicants and employees along with a summary of their rights under the FCRA before taking an adverse action against them based on a consumer report; and
Consumers have the right to obtain a copy of their consumer report and dispute erroneous or incomplete information with the CRA.

The testimony also highlights the FTC’s law enforcement and education efforts in this area.  The Commission recently took action against HireRight Solutions, Inc., an employment background screening company, resulting in a settlement that included $2.6 million in civil penalties and an order barring illegal practices.The FTC alleged that the company provided reports that included inaccurate information, such as criminal records pertaining to someone other than the subject of the report, and failed to comply with the FCRA’s dispute provisions.

In addition, the FTC took action recently against Spokeo, Inc., a data broker, resulting in a settlement that included $800,000 in civil penalties and an order barring future law violations. The FTC alleged that the company sold detailed profiles of consumers to companies in the human resources, recruiting, and employment background screening industries and failed to take reasonable steps to ensure that the reports it sold would be used only for purposes allowed by law, ensure the reports were accurate, and inform users of the reports of their FCRA obligations.

The FTC publishes a wide array of educational materials designed to help employees and employers understand their rights and obligations, including What to Know When You Look for a Job, a consumer alert providing job applicants with an overview of their rights under the FCRA, and Using Consumer Reports: What Employers Need to Know, a business education publication explaining the FCRA obligations of employers that use consumer reports for background screening.

The Commission vote approving the testimony was 5-0. The written testimony was submitted for a briefing that will take place on December 7, 2012.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics.  Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.

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