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The CFPB's Opinion On Permissible Purposes For Obtaining Consumer Reports
August 9, 2022
About The CFPB’s Opinion
The CFPB wrote a letter of opinion that emphasized employers must have a permissible purpose to obtain background checks from Consumer Reporting Agencies (CRAs). It was based on content from the Fair Credit Reporting Act, a federal law that decrees CRAs must take steps to ensure they only provide reports to organizations that have a legal reason to receive and review them.
In their opinion letter, the CFPB stated that the FCRA protects consumes in multiple ways, including by limiting the circumstances under which CRAs may disclose personal information. They referenced section 604 of the law (Permissible purposes of consumer reports), which explains when an entity is eligible to receive background checks.
Laws like the FCRA are designed to help prevent people and organizations from taking advantage of consumers. If someone who has no legal reason is allowed to view a background check, it could lead to a variety of issues for the victim. According to the CFPB’s opinion letter, that includes risks to the person’s privacy, reputation as well as emotional, physical and economic harms.
Employment Is A Permissible Purpose
The FCRA clarifies that employment is a permissible purpose, so organizations may order and review consumer background checks when bringing on employees, volunteers or contractors. These reports help employers determine if a person is qualified and eligible for the position to which they are applying. They also empower hiring managers to see if someone has a serious criminal record that might indicate they pose an undue risk to current staff, the public or the business.
Employers that do not run background checks might be taking an unnecessary risk. If a business brings on someone who has convictions for violence or something relevant to the position, such as someone who applies to work at a financial agency who has fraud or finance-related offenses on their record, they could be accused of negligent hiring.
Employers Should Work With Reputable CRAs
When an employer needs a consumer report, best practice is to work with a reputable CRA. An ideal way to accomplish this is to work with one that is accredited by the Professional Background Screening Association (PBSA).
The PBSA promotes a high level of ethics and performance standards for the background screening industry. Their core goals include maintaining a strong commitment to integrity, compliance, service and proactive engagement. To become accredited, CRAs must undergo a thorough audit by a third party. Only when they meet the strict guidelines of the PBSA will a CRA be granted accreditation.
Need Background Checks?
If you are an employer, then you have a permissible purpose to order consumer reports. The team at Backgrounds Online can help you customize screening packages for any position and based on your specific needs, industry standards and relevant laws.
When you’re ready to get started, please contact us. We are available to assist you Monday through Friday from 5am to 6pm PT.
