The same is a federal law that controls the use of consumer information, dissemination and collection which also includes the consumer’s credit information. It was first passed in 1970 but became effective on 25th of April, 1971. However, it had originally been proposed to amend the Truth in Lending Act in 1968 but the plan did not succeed during the voting process to enact it. As a result, therefore, there was a new realization on the need for a legislation that would address the abuse of consumer credit reporting and which would also protect the privacy and confidentiality of a consumer reporting. Therefore, one of the functions of the Fair Credit Reporting Act is to restrict persons who may have access to consumer sensitive credit information and control how that particular information can be used.
There are entities that specifically collect and disseminate consumers information that could be used for the evaluation of their credit and also employment; this entities are the consumer reporting agencies. A consumer reporting agency is a person(s) who uses any means or facility of interstate commerce for the reason of preparing consumer reports. Their responsibilities under Fair Credit Reporting Act include notifying a consumer of negative information that might have been removed due to the consumer’s dispute, within five days. They also have a duty to provide consumers with information concerning them found in the agency’s files as well as taking steps to make clear about the accuracy of information that may be dispute by a particular consumer. In this age, most employers prefer hiring employees with regards to their honesty, safety and qualifications. As a result, they use records such as their consumer reports, criminal records or driving records so as to determine whether to hire them or not. It is, therefore, important for the employers to be able to balance their need to know about an employee’s background by not forgetting their individual rights.
As stipulated earlier, the main goal of the FCRA is to protect the privacy rights of the American people, but it also has the mandate of holding the consumer reporting agencies responsible for the fairness and accuracy of credit reporting and other information. In that regard, section 602 of the Act provides that its purpose requires that a consumer reporting agency adopts a reasonable procedure that would meet the needs of commerce for consumer credit, personnel, insurance and other information in a manner that is fair and equitable to the consumer with regards to the accuracy, relevancy, confidentiality and proper utilization of such information. The FCRA also regulates the consumers reporting agencies, employers ordering background screening reports from third party providers.
Over the years, for instance in 1997, the FCRA was modified in order to increase the legal responsibilities of employers who use consumer reports or background checks. The employers’ screening duties have been expanded under the FCRA due to the concern for applicants who are unfairly denied employment because of incomplete or inaccurate reports. The employers, therefore, are obliged to make sure that the applicants are aware that consumer reports may be used for employments reasons and that they agree to such use. Furthermore, they also should immediately notify the applicants if the information contained in the consumer reports may lead to negative employment decision.
The main provisions of the FCRA include; notifying applicants in writing, prior to ordering background checks, that their organization may obtain a consumer report for employment purposes. This notice should be a clear, conspicuous and separate document. In addition, the FCRA requires that the employers should obtain the employees’ written authorization before giving an order of background checks. This does not, however, need to be a separate document; the employers have the option of combining the authorization with the notice and disclosure. Premier background screening companies may sometimes need the employers to get their employee’s signature on an additional release authorization form; this helps in further decrease of risk liabilities. Another important provision is that, the consumer reporting agencies require employers to certify that they are FCRA compliant and would not at any point misuse the background information and that they would abide by the federal and state equal employment opportunity regulations. In addition, in circumstances where the employers are considering making unfavourable decisions as a result of an employee’s background screening result, the Act requires the employers to notify the employee.
The rights of consumers under the Fair Credit Reporting Act include the fact that a consumer should be informed that information in their files has been used against them. Also, the consumer has the right to know the kind of information contained in the files; he or she may request to obtain all the information about them found in a consumer reporting agency files. For this to happen the consumer will need to provide their proper identification which includes their social security numbers. The file disclosure is basically free and one is usually entitled to it if they are a victim of identity theft or if the file contains false or inaccurate information due to fraud or if someone uses the information found in the file to take adverse actions against the consumer. Another right of a consumer under the FCRA relates to the right to request for a credit score. In this case, credit scoring is a system used by creditors to determine whether to give someone credit and how much to charge as a result. Furthermore, a consumer has the right to receive one free credit report each year from each of the major credit reporting agencies. If there is incomplete or inaccurate information found in the files, the consumer has the right to dispute the information by writing a letter to the consumer reporting agency; after which the agency would investigate the disputed information through the information provider within thirty days and thereafter when the investigation is complete, the agency must give the consumer the results in writing. The consumer reporting agencies are under no circumstances allowed to report outdated negative information of a consumer.
Therefore, it is clear that due to the changing times, employers are expected to know more information about their employees. Therefore, pre-employment background screening as regulated by the FCRA is one of the ways that help employers to diligently hire safe, honest and qualified employees and avoid negligent hiring exposure. In general, therefore, the FCRA helps the employers to gain reliable and accurate consumer report information so as to make well informed hiring decisions. Nevertheless, the FCRA which is a federal law, also have safeguards put in place so as to protect the personal private rights of the consumers.
Works Cited
Carter, Carolyn L. Fair Credit Reporting. New York: National Consumer Law Center, 2011.
Federal Trade Commission, United States. Fair Credit Reporting Act. New York: Federal Trade Commission, Bureau of Consumer Protection, 2010.
Harak, Charlie and Roger D Colton. Access to Utility Services. NewYork: National Consumer Law Center, 2010.
Ogburn, Willard. Fair Credit Reporting Act. New York: National Consumer Law Center, 2011.
