FCRA OVERVIEW

The federal Fair Credit Reporting Act (FCRA) governs consumer reporting agencies and consumer reports and is designed to protect individuals by promoting confidentiality, accuracy, relevance and proper utilization of information in the files of every Consumer Reporting Agency (CRA). As a background screening company, Lagniappe is considered a CRA.

Although the Federal Trade Commission (FTC) has been the agency traditionally responsible for interpreting the FCRA, The Dodd-Frank Wall Street Reform and Consumer Protection Act, which was signed into law by President Obama on July 21, 2010, transferred the rulemaking authority for the FCRA to the Consumer Financial Protection Board (CFPB). The newly created CFPB has now become the agency primarily responsible for interpreting the FCRA.

What is a Consumer Report?

Under the FCRA, the background screening reports Lagniappe provides to clients are classified as "consumer reports." This includes all types of reports including, but not limited to, credit reports, criminal reports, motor vehicle reports, civil litigation reports, professional license and education verification as well as employment history records.

Written notice and Authorization

Before an employer can get a consumer report for employment purposes, they must notify the individual in writing - in a document consisting solely of this notice - that a report may be used. They must also get the person’s written authorization before asking Lagniappe for the report. Lagniappe will not accept any order for a background report that is not accompanied by a signed authorization.

Certification to Consumer Reporting Agency

As part of signing up as a new client, employers must certify to Lagniappe that they are in compliance with the FCRA and will not misuse any information in the report in violation of federal or state employment opportunity laws or regulations.

Adverse Action Procedures

If an employer uses a consumer report for an “adverse action” such as denying employment, reassigning or terminating an employee based in whole or in part on information contained in a consumer report, then

Step 1: Before you take the adverse action, the employer must give the individual a pre-adverse action disclosure that includes a copy of the individual's consumer report and a copy of "A Summary of Your Rights Under the Fair Credit Reporting Act."

Step 2: After you've taken an adverse action, the employer must give the individual notice that the action has been taken in an adverse action notice. It must include:

  • The name, address and phone number of the CRA that supplied the report;
  • A statement that the CRA who supplied the report did not make the decision to take the adverse action and cannot give specific reasons for it; and
  • A notice of the individual's right to dispute the accuracy or completeness of any information the agency furnished, and his or her right to an additional free consumer report from the agency directly upon request within 60 days.

Non-compliance

There are legal consequences for employers who fair to get an applicant's permission before requesting a consumer report or who fail to provide pre-adverse action disclosures and adverse action notices to unsuccessful job applicants. The FCRA allows individuals to sue employers for damages in federal court. In addition, the Federal Trade Commission or other federal agencies and the states may sue employers for non-compliance and obtain civil penalties.

The FCRA requires that Lagniappe provide our clients information regarding their obligations under the law. It is the employer's responsibility to review the information provided and comply with the requirements placed upon you as a user of consumer reports. Because the information contained herein is general and neither complete nor necessarily applicable to your specific circumstances, please consult your legal counsel for guidance.

Relevant Links and Forms

The following documents are provided for your use: