Fair Credit Reporting Act (FCRA) Compliance Checklist

Fair Credit Reporting Act (FCRA) Compliance Checklist

The Fair Credit Reporting Act (FCRA) operates to protect consumers. The FCRA regulates employers who perform background checks using Consumer Reporting Agencies (CRA’s). Further, the reports include education verification, criminal history, employment history, professional licenses, and health care sanctions. FCRA compliance is mandatory for all employers who conduct background checks using third parties.

What Is FCRA Compliance?

The FCRA was enacted in 1970 to resolve inaccuracies in credit reports. In 1966, FCRA’s mandate expanded to include background reports and screening services for employment purposes. Further, employers using third-party services to perform background checks must advise employees or applicants in writing regarding the screening processes being conducted. Obtain written authorization from the applicants as per the law.

Request other disclosures upon obtaining the applicant’s request. Obtain the employees’ permission before any adverse action occurs based on the consumer reports of the screening process.

FCRA Compliance: A Responsibility of Both the Employers and the Investigative Firm

Employers performing background checks must ensure compliance with state and local laws on the use of consumer reports. Compliance from the CRA companies includes adequate procedures implemented to ensure all background check reports are accurate and within the ambit of required legal guidelines.

The following checklist is useful to ensure compliance with FCRA requirements:

  • Provide written notice to the employees or applicants to notify them about the background screening.
  • Notify the applicants of their intention to perform and prepare an investigative report on their character, reputation, and lifestyle. Further, additional disclosures and a summary of the substance and scope of the screening are necessary.
  • Obtain consent from the applicants to perform the screening process.
  • Furnish the CRA company with certification of obtained permission.
  • Provide a pre-adverse notice to the applicants on decisions to take adverse action on reports of the screening results. Include a copy of the results and a summary of your rights under the FCRA.
  • Accord applicants an opportunity to dispute or verify the background check results before making a final decision.
  • Lastly, provide applicants with the name, address, and contacts of the CRA that conducted the screening and an accountability statement from the company. Compliance with FCRA requirements should follow all state and local guidelines.


The employee has a right to dispute the findings of the consumer report within 60 days. The CRA and employers should, indeed, retain records as per federal and state laws and dispose of all documents (paper and electronic) according to the FCRA compliance guidelines. Contact us for all your queries about compliance requirements and efficient hiring processes.

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