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Background Checks for Employees Fail to Comply with Recent Amendments to the FCRA

On Behalf of | Jan 23, 2013 | Consumer Protection

In a post earlier this year I discussed the recent amendments to the Fair Credit Reporting Act (“FCRA”) requiring businesses using background checks on existing or potential employees to put the individual on notice of its intention to use the information in making its decision in hiring or firing employees. In ensuring compliance with the new regulation, the Federal Trade Commission (“FTC”) went undercover to investigate the practices used by numerous employers.  After its investigation of some 45 companies, the FTC placed several companies on notice that their speedy internet background checks were not cutting it and are likely in violation of the FCRA.

The FTC sent warning letters to as many as 10 business notifying them that the current plans in place for performing background checks on consumers directly violates the new amendments to the FCRA.  Specifically, these companies are using the information obtained in background checks to hire new employees and failing to provide notice to the individuals of their intention to review and use the information.  The law requires that companies providing information contained in the background check assure the accuracy of their records and notify the consumer when a background check has been performed.  When a business doesn’t take these steps, it must provide notice that its background checks may include errors and are being used for marketing or entertainment purposes only.

When putting these companies on notice of their potential violation of the statute, the FTC states that its primary concerns is for the consumers whose information is being used that may be inaccurate or out-of-date.  When companies don’t comply with the letter of the law, these consumers do not have an opportunity to protect themselves by reviewing their reports and challenging any potentially inaccurate information.

While the FTC is keeping a close watch on companies to assure compliance, it states that in these 10 cases there was some indication of non-compliance and warns that failure to change their current practices may force a more formal investigation resulting in hefty fines.

See our other related blogs on background checks and some of the stories of some unfortunate consumers: Backgound Checker Violates FCRA, Another Horrifying Background Check Story, and  Employment Background Causing Job Loss.

If during your search for a new job or during your employment your employer failed to provide you with notice of their intention to access your credit report, your rights may have been violated under the FCRA.  Contact SmithMarco P.C. for a free case review.