Recent changes by the government indicate greater enforcement is on the way. Learn, in this brief webinar, how taking a few simple steps can help you stay in compliance. Join us for this timely webinar as presenter John Pate shares his expertise on FCRA. At the end of the webinar, we will also host a live Q&A session with John.

1. Fair
Credit
Repor-ng
Act
Basics
John
Pate
–
LS
Screening

2. Disclaimer
• I
am
not
an
a>orney.
Some-mes
I
talk
like
one
or
what
I
believe
an
a>orney
sounds
like.
I’ve
met
many
a>orneys
and
am
also
friends
with
several.
They
are
essen-ally
good
people
who
try
hard
and
have
good
inten-ons.
Their
primary
job
is
to
avoid
risk
but
they
are
not
always
right.
• What
I’m
going
to
say
today
is
totally
my
opinion.
It
is
based
on
experience
(30+
years)
and
knowledge
gained
from
making
mistakes.
This
conversa-on
is
about
the
fundamentals,
the
“basics”,
which
will
comprise
99%
of
the
FCRA
issues
you
will
face
on
a
daily
basis.
If
you
run
into
an
odd
situa-on,
ask
me
because
I
may
have
already
run
into
it.
But,
at
the
end
of
the
day,
you
need
to
talk
to
an
a>orney.
They
are
licensed
to
give
legal
advice
and
I
am
not.

3. This
is
my
a>orney
face

4. Why
Should
I
Care
About
This?
• April
2012
–
EEOC
enacts
new
guidelines
for
use
of
criminal
records
in
hiring
• November
9,
2012
–
Today
Show
airs
expose
on
Background
Check
Industry
• January
1,
2013
–
Consumer
Finance
Protec-on
Bureau
assumes
enforcement
of
FCRA
• February
12,
2013
–
60
Minutes
airs
segment
the
“shocking
truth”
about
credit
bureaus

5. Storm
Clouds
are
Gathering…
It’s
only
a
ma>er
of
-me

6. Plain-ff
A>orneys
Smell
Blood

7. Overview
• The
FCRA
is
a
Federal
law
that
regulates
a
very
broad
range
of
consumer
transac-ons
including,
but
not
limited
to,
credit,
insurance,
housing
(tenants)
and
the
employment
process.
• Many
states
have
their
own
version
of
the
FCRA.
The
Federal
law
supersedes
state
law
unless
the
state
law
is
more
stringent
i.e.
California.

8. How
We
Got
Here
• The
FCRA
was
enacted
in
1970
• Substan-ve
amendments
in
1996
and
2003
• Federal
Trade
Commission
was
responsible
for
enforcement
• Effec-ve
January
1,
2013,
enforcement
is
now
shared
with
Consumer
Finance
Protec-on
Bureau
(CFPB).

9. TERMS
YOU
NEED
TO
KNOW
• CRA
-­‐
Consumer
Repor-ng
Agency:
Any
person
or
agency
that
assembles
consumer
credit
informa-on
(background
checks)
for
end
users
for
money.
That’s
what
LS
Screening
is.
• End
User:
Any
person
or
Agency
that
has
“permissible
purpose”
to
access
public
and
proprietary
records
in
the
employment
process.
That’s
what
YOU
are.
• Consumer:
Job
Applicant

10. Terms
-­‐
Con-nued
• Permissible
Purpose
occurs
when
a
person
or
Agency
has
established
the
legal
right
to
access
public
and
proprietary
records
in
a
regulated
process
(employment).
Permissible
purpose
can
be
defined
by
both
the
Federal
and
State
governments
and
may
very
accordingly.
In
our
world,
Permissible
Purpose
begins
when
the
employer
discloses
to
the
applicant
that
a
background
check
will
be
ordered
and
the
applicant
signs
the
disclosure
and
release
form.
• “NAAASR”
-­‐
pronounced
“NAY-­‐zer”:
No-ce
of
Adverse
Ac-on
and
Applicant
Summary
of
Rights

11. Terms
-­‐
Con-nued
• Consumer
Report:
any
wri>en
or
verbal
report
about
a
consumer
(applicant)
regarding
their
“fitness”
or
“worthiness”
for
employment.
It
can
include
criminal
records,
credit
reports,
driving
records,
verifica-on
of
previous
employment
and
any
other
piece
or
combina-on
of
pieces
of
data
that
could
affect
an
employer’s
hiring
decision.
• Adverse
Ac@on:
Any
ac-on
taken
by
the
end
user
that
has
a
nega-ve
impact
on
a
consumer
i.e.
“denial,
cancella-on
or
unfavorable
change”
in
employment
status,
includes
hiring,
promo-on,
etc.

12. The
Par-cipants
• The
Consumer
Repor-ng
Agency
(CRA)
-­‐
LS
Screening
• The
End
User
-­‐
The
Employer
-­‐
G&A
Partners
• The
Consumer
-­‐
The
Applicant
• Proprietary
Data
Providers
i.e.
MVRs,
credit
reports
(new)

13. Responsibili-es
• The
CRA
(LS
Screening)
• Document
and
establish
permissible
purpose
of
end
user
• Provide
reports
that
comply
with
Federal
and
State
Laws
• Maintain
“reasonable”
measures
to
insure
accuracy
of
reports
• Re-­‐inves-gate
consumer
reports;
correct
inaccurate
reports

14. Responsibili-es
• The
End
User
• Establish
permissible
purpose
status
by
complying
with
exis-ng
laws.
• Disclose
to
and
receive
consent
from
the
applicant
before
background
check
is
ordered.
• Provide
NAAASR
when
employment
is
denied
and
the
background
check
contributed
“in
whole
or
in
part”
to
their
decision.

15. Responsibili-es
• The
Applicant
• Can
include
employee,
independent
contractor
or
volunteer
• Has
the
right
to
dispute
inaccurate
informa-on
• Proprietary
Data
Providers
(MVRs,
Credit
Reports,
etc.)
• Audit
CRAs
to
insure
permissible
purpose
is
being
observed.

16. What
Every
Employer
Needs
to
Know
• The
key
to
success
is
execu-ng
the
fundamentals
• Disclose
and
get
consent
in
wri-ng
from
the
Applicant
before
reques-ng
a
background
check
when
the
end
result
may
be
adverse
ac-on.
This
is
where
most
mistakes
occur.
• Provide
NAAASR
to
Applicants
that
aren’t
hired
• FCRA
does
NOT
apply
to
drug
tes-ng

17. Disclosure
• Should
be
clear,
conspicuous
and
in
wri-ng
before
the
background
check
is
ordered
• Should
be
in
a
document
that
consists
“solely
of
the
disclosure”
• Should
not
be
part
of
a
printed
employment
applica-on
• “Blanket”
(aka
“Evergreen”)
disclosures
are
permi>ed.
• FYI
-­‐
Employees
can
DQ
Applicants
who
refuse
consent

18. Pre-­‐Adverse
Ac-on
• Before
taking
adverse
ac-on,
the
employer
must
provide
the
consumer
1)
With
a
copy
of
the
report
and
2)
A
summary
of
the
consumer’s
rights
under
the
FCRA
• The
report
must
be
un-­‐redacted
i.e.
must
be
the
complete
report
• No-ce
must
be
given
if
the
informa-on
in
the
report
DQs
the
applicant
from
employment
• The
idea
is
to
give
the
applicant
-me
(one
week
is
recommended)
to
dispute
the
informa-on
in
the
report.

19. Adverse
Ac-on
• Is
the
sole
responsibility
of
the
End
User;
can
outsource
the
process
but
not
responsibility
• Can
be
given
orally,
in
wri-ng
or
electronically
• Must
include
right
to
a
free
copy
of
the
report
and
the
right
to
dispute
the
accuracy
of
the
report
• Must
include
name,
address
and
telephone
of
CRA
who
created
the
report

20. What
does
John
think??
• Disclaimer
Redux
• The
Disclosure/Consent
should
be
simple,
separated
from
the
applica-on
&
“evergreen”
(always
in
force)
• Pre-­‐No-ces
of
Adverse
Ac-on
should
be
given
to
everyone
on
whom
database
searches
are
used
as
primary
search
source.
Database
searches
are
not
the
most
accurate
or
current
record.

21. What
does
John
think??
• Don’t
do
a
background
check
on
every
applicant
BUT,
if
you
do
and
don’t
hire
the
person
for
any
reason,
send
them
a
NAAASR.
• Avoids
having
to
“prove
the
nega-ve”
• Eliminates
the
issue
completely
• Cheap
insurance
• Keep
employee
files
for
5
years

22. FAQs
• Do
I
need
a
release
to
run
a
criminal
background
check
on
someone.
• YES
-­‐
if
the
end
result
may
be
adverse
ac-on
(of
any
kind)
against
the
subject.
Criminal
records
are
public
and
accessible
to
anyone
so
it’s
all
about
how
they
are
used.
• What
about
an
MVR
or
credit
report?
• Those
records
are
not
public
and
access
is
regulated;
disclosure
and
a
signed
release
are
required
• Do
I
need
to
send
a
NAAASR
to
everyone
I
don’t
hire?
• No
-­‐
the
FCRA
says
the
background
check
must
have
contributed
to
your
report.
However,
since
you
have
the
report,
you’ll
then
have
the
burden
of
proving
it
wasn’t
a
factor
-­‐
not
easy
to
do.
• What
kind
a
background
check
isn’t
a
consumer
report
regulated
by
the
FCRA?
• The
one
you
don’t
order.
Okay,
seriously,
it’s
the
one
that
has
nothing
to
with
the
employment
process.

23. References
• The
Fair
Credit
Repor-ng
Act
• h>p://www.qc.gov/os/statutes/
031224fcra.pdf
• No-ce
to
Users
of
Consumer
Reports
• h>p://www.qc.gov/os/
2004/11/041119factaapph.pdf
• NAAASR
(2013)
• h>p://lsscreen.com/resources/

24. Ques-ons?
Please
send
all
ques-ons
and
comments
to
info@gnapartners.com