The FCRA and Background Checks: A Complete Guide

Background checks are mandatory, often necessary parts of hiring for many positions. But employers can’t snoop into your background info however they please. In fact, they have to adhere to certain regulations outlined by the Fair Credit Reporting Act or FCRA.

The FCRA also establishes and ensures certain rights for American consumers like you. Today, let’s take a closer look at what the FCRA is, how it works, and how it affects background checks.

What is the FCRA?

The Fair Credit Reporting Act is a federal regulation that both enshrines consumer rights and outlines rules and regulations that employers and background check agencies have to follow. In a nutshell, it states:

• The process by which employers can ask for background checks from their prospective and current employees
• When consumers must be reported when their background or credit information affects their employment or financial opportunities
• What consumers can do if they encounter false or erroneous information in a background check or credit report

The FCRA is a highly important piece of legislation, as it ensures that you always have options if a background screening agency provides false or erroneous information to your employer. Furthermore, it ensures that employers and screening agencies can’t research your background without your consent.

Consumer Rights Under the FCRA

To understand how the FCRA affects background checks, you need to fully grasp your rights under this legislation. According to the FCRA, all consumers have the right to:

• Informed consent before an employer commits a background check. When you sit for an interview or apply for a job, the prospective employer will likely have you sign a form stating that you submit to a background check from a third-party screening agency
• Review any background check information, as well as correct any mistaken or erroneous information
• File a dispute with a credit check or background check agency, pointing out erroneous information and requesting correction from them
• Be informed when information from a pre-employment background check or credit check is used to make any decisions that adversely affect you

How the FCRA Affects Background Checks

Now let’s take a look at how the FCRA directly affects background checks by breaking down some situational examples.

You Provide Written Consent to All Checks

When you sit down for an interview, the interviewer for the new company and you a paper slip. They request that you sign it so they can take your resume information and give it to a background screening agency. If you sign a paper, you provide your consent to the background check, including a credit check in some circumstances.

If any organization, whether that’s an employer or a background screening agency, performs a background check on your person without your written consent, they have violated the FCRA. In such circumstances, you may have grounds for a lawsuit or other legal action.

You Receive Pre-Adverse and Adverse Action Notices

Imagine applying to a new job and submitting to a background check. When the check completes, the employer notices a few red flags in the report. To abide by the FCRA, they have to give you a pre-adverse action notice.

A pre-adverse action notice is a document stating that the employer is reconsidering a job offer or considering not offering you a job on the basis of some element of your background info. The pre-adverse action notice should include a copy of your background report or the contact information of the credit screening agency that the employer used.

Under the FCRA, you as a consumer have the right to review the information in the background check report and locate any erroneous, out-of-date, or otherwise incorrect information. At this stage, your prospective employer has to give you five business days to look over the report and respond. 

If you respond by saying that you wish to dispute the information and claim that it’s wrong, the employer can decide to hold off on reconsidering your job offer.

If an employer decides to rescind a job offer or not offer you a job at all, they have to send you an adverse action notice. This is very similar to a pre-adverse action notice; it just states that the decision is final. Note that an adverse action notice doesn’t have to tell you what exact information the employer used to make its decision. 

It just has to say that some element of your background or credit info was a deciding factor.

Again, you should find the contact information for the credit screening agency used in both the pre- and adverse action notices.

You Can File a Dispute

The FCRA gives you the right to file a background check or credit information dispute with the agency in question.

Say that you read through your background report only to find that the background screening agency has confused your identity with someone else's. Even worse, they've ascribed a criminal conviction to your background when you are never convicted of a crime!

Now that you know this, you can contact the background screening company and file a dispute online or by first-class mail. In either situation, you can point out the erroneous information and request that the background check company correct it at the earliest opportunity.

The FCRA states that the background screening agency has 30 business days from receiving your dispute to investigate the matter. If it locates the erroneous information and agrees with your conclusion, it has a legal obligation to fix it ASAP.

If a background check company doesn’t investigate the issue within 30 days, or if it finds inaccurate information but doesn’t make any corrective measures, you could have grounds for a lawsuit.

You Can Sue Violators of Your Rights

As touched on above, the FCRA does guarantee you the right to sue violators of your legislative rights. For instance, if a background screening company knowingly provides a prospective employer with false information, you can sue them for damaging your job prospects.

Similarly, you can sue a background check company if they cause you to lose a job on the basis of erroneous background information. In these cases and more, you have to prove that the background check company:

• Knowingly violated your FCRA rights
• Caused material damage is to your well-being, such as by preventing you from getting a job, causing you to lose a job, extending your job hunt, etc.

What about prospective employers? You can even sue employers if they violate your FCRA rights, such as by giving your information to a background check company without your consent or by denying you a job opportunity on the basis of background info without telling you. Note, of course, that employers can deny you a job offer for other reasons. But they have to tell you if it’s because of your background or credit info.

In all of these instances, successfully suing background check companies or employers is easier with knowledgeable attorneys on your side.

What to Do if Your Rights Are Violated

If you believe your rights under the FCRA have been violated in any way, it’s a good idea to contact knowledgeable background check attorneys right away.

At Fair Credit, our legal specialists know the ins and outs of FCRA rights and regulations. We can provide a range of assistance to your case, including:

• Offering good legal counsel regarding your current legal options. For instance, in some cases, it might be wise to sue the background check agency. In other cases, arbitration might be a more viable path to legal satisfaction
• Helping you get the evidence you need to file a successful dispute claim against a background check company or credit check company
• Representing you in court if your case goes to trial or otherwise requires a presentation of the assembled evidence

If a lawsuit against a background check company is successful, you could recover damages of up to $1000 or even more. Extra damages may be awarded to help you cover attorney fees and other ancillary expenses.

However, winning a lawsuit against a background check company is never simple, nor is it ever guaranteed. Even if you think you have an ironclad case, you should still speak to attorneys to broach all of your options and discover the ins and outs of the lawsuit process. Our lawyers are well-equipped and ready to answer any questions you have, and we've helped consumers just like you in similar cases.

Conclusion

The FCRA requires employers to get written consent from you before performing a background check. It also enshrines various rights you can take advantage of if you believe that your background check information is false or erroneous in some way.

If you think a background check mistake caused you to miss out on a job offer or lead to other damages, Fair Credit can help. Our experienced attorneys know exactly what to do to help you file a dispute against the background check agency, plus sue the agency if it refuses to correct erroneous information. Contact us today to learn more.