What Is FCRA Compliance for Background Checks, and Why Is It Important?

What Is FCRA Compliance for Background Checks, and Why Is It Important?

As an organization, are you considering running background checks on job applicants or employees? Are you well informed on the need to work with an accredited service provider? You must legally adhere to the Fair Credit Reporting Act (FCRA) compliance for background checks to obtain a consumer report.

The FCRA federal law protects the rights and privacy of individuals subjected to consumer reports. Background check information obtained for employment is a consumer report subject to the FCRA.

What Is the Fair Credit Reporting Act (FCRA)?

The FCRA is federal legislation enacted in 1970 to ensure that consumer agencies promote accurate, fair, and impartial background check reports to consumers’ privacy. The organizations check on the collection and use of consumer data by employers.

The FCRA is a third-party organization that consumer reporting agencies and employers use to perform background checks on individuals.

Background Check: What Is It?

background check is a comprehensive analysis and review of an individual’s records used to generate a consumer report. The FCRA mandate is to regulate Consumer Reporting Agencies that provide reports and employers that make use of the reports.

A consumer report contains the following information that determines the eligibility of an individual for credit, employment, or insurance;

  • Credit Health
  • Drug Tests
  • Employment History Verification
  • Social Security Verification
  • Educational Verification
  • Criminal Records
  • Lastly, Personal and Professional References

Background checks ensure that consumers give the correct information on their background.

FCRA Compliance for Background Checks: Why It Is Essential to Employers?

FCRA compliance ensures that an organization meets all the requirements set by the Fair Credit Reporting Act. The guideline requires employers to run fair, transparent, accurate background checks on consumers. Businesses must also meet the Equal Employment Opportunity Commission guidelines.

FCRA guidelines dictate how employers request, receive and use background check reports from a third-party entity. Employers must meet some laws and obligations before they review a consumer report when hiring new employees.

An employer must present a pre-adverse action disclosure with a copy of the report and your rights if they don’t hire you based on your report. If an employer does not hire you, they must notify you. Also, provide the name and address of the Consumer Reporting Agency and information on how to dispute the report. For investigative reports, an employer must notify an employee or applicant of the scope of the investigations and their rights.

What Are the Consequences of FCRA Non-Compliance?

For organizations to be on the safe side and avoid FCRA lawsuits, they must adopt due process when requesting FCRA background checks.

Learn More About FCRA Compliance for Background Checks

Do you want to hire the right employee? Have you considered running a background check to obtain the correct information while meeting the legal obligations? Schedule a call to book an appointment and get started today. We have comprehensive solutions to help you find suitable candidates. We are also tried and tested by our partners.

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