The Fair Credit Reporting Act ("FCRA") is the federal law that must be adhered to by those requesting, performing, or using consumer reports (or reports containing consumer information, more commonly referred to as background checks).
A growing number of highly recognized companies have been hit with class action lawsuits alleging violations of the FCRA; lawsuits that could have easily been avoided.
Though the FCRA guidelines are simple enough to understand, their importance can't be overstated.
It all starts with consumer disclosure and authorization (documents collectively referred to as a "release"). The release must meet all federal and state requirements, which may differ depending on where your applicant lives.
Backgrounds Online takes the guesswork out of creating a legally acceptable release by providing one for our clients' use. Due to the nature of state regulations, and how frequently they evolve, we're constantly updating this document and suggest you regularly download and utilize the newest version available in our Resource Center. You can utilize a release of your own creation, but be mindful of new, required inclusions and restrictions as mandated by state and federal authorities.
The best practice is to review existing laws or regulations and stay informed on any updates pertaining to consumer reports. Tip: if you are requesting a background check on an individual who resides in a state other than that in which you operate, adhere to the laws from both states. Among other state-specific laws (all of which are not listed herein)...
Keep the release on file in a secure location. Submitting a copy of the release to us when ordering a report is not mandatory, except when necessary to facilitate a request (for example, Employment Credit Report or verifications).
The best practice is to keep the release on file for a minimum of 5 - 7 years, regardless if the applicant was hired or not. After such time, the release may be disposed of in a matter which complies with the Federal Trade Commission's Disposal Rule.
Guidance from the FTC regarding reasonable measures for disposing of consumer report information:
The FCRA is designed to protect consumers and by following these simple guidelines, you too are ensuring that consumer information is handled appropriately.