The Fair Credit Reporting Act (FCRA)

The Fair Credit Reporting Act (FCRA) is a federal law enacted in 1970 to promote accuracy, fairness, and privacy of consumer information contained in the files of consumer reporting agencies. It plays a crucial role in regulating how employers conduct background checks and ensuring that individuals’ rights are protected. Whether you are part of an organization running background checks or the subject of a background check yourself, understanding the rights outlined by the FCRA is essential to the process.

Key Provisions of the FCRA

Consent Requirement:

• Employers must obtain written consent before conducting a background check. This ensures that the subject is not only aware of the investigation but has also authorized it.
• 
  

Disclosure:

• Before obtaining a consumer report, employers must provide a clear and conspicuous disclosure in writing, separate from the job application, informing you that a background check will be conducted.
• 
  

Access to Information:

• The subject of a consumer report has the right to know what is in their file. Consumer reporting agencies must provide subjects with all the information in their file if requested. Subjects are also entitled to one free credit report from each of the three major credit reporting agencies annually (Equifax, Experian, and TransUnion).
• 
  

Adverse Action Notification:

• If an employer decides not to hire someone based on information in their consumer report, they must provide the subject with a copy of the report and a summary of their rights under the FCRA before taking adverse action. This gives the subject the opportunity to review the report and dispute any inaccuracies.
• 
  

Dispute Inaccuracies:

• If inaccuracies are found in a report, the subject has the right to dispute them with the consumer reporting agency. The agency must investigate and correct any inaccurate, incomplete, or unverifiable information.
• 
  

Limits on Reporting:

• The FCRA limits the type of information that can be reported and for how long. For example, the FCRA only allows consumer reporting agencies to report civil suits, civil judgments, arrest records, and other adverse information that predates the report by seven years or fewer—with the clock starting as soon as the information is filed or entered into the record. For criminal convictions, however, there is no such limitation set by the FCRA.
• 
  
• While the FCRA allows the reporting of criminal convictions older than seven years, several state laws differ from this. For example, California’s Investigative Consumer Reporting Agency Act (ICRAA) limits the reporting of conviction records in background checks to seven years or less. The ICRAA’s restriction takes precedence over the FCRA. 
• 
  
• It’s important to know the laws in your local jurisdiction when it comes to the legal limitations on reporting.
• 
  

The Fair Credit Reporting Act promotes the accuracy, fairness, and privacy of information in the files of consumer reporting agencies.

Learn more by visiting the Federal Trade Commission here.

Read the Summary of Rights Under the Fair Credit Reporting Act here.