Why Are Employment Background Checks Considered Consumer Reports?

BACKGROUND CHECK

Why Are Employment Background Checks Considered Consumer Reports?

That is a great question, and we can thank the federal government for making the language surrounding employment background checks so confusing.

The quick answer is, “YES!”

Employment Background Checks are considered a consumer report under the Federal Fair Credit Reporting Act if:

• You partner with a consumer reporting agency (background screening firm); and

• They compile background screening reports on consumers; and

• You pay them a fee to do this.

Click here for more on background checks with Safe Hiring Solutions.

Since I launched Safe Hiring Solutions in 1994, we have consistently heard from candidates and clients that they wanted to run criminal background checks NOT a consumer report. The belief is that a consumer report is synonymous with a credit report.

Why Are Employment Background Checks Considered Consumer Reports?

That is understandable since a credit report is probably the most recognizable type of consumer report; however, any report on a consumer compiled by a background screening firm is also considered to be a consumer report.

I agree the language is a confusing.  

Let me provide a few key definitions so we can better understand what all of this means.

• Consumer Reporting Agency (CRA).

  A CRA by federal definition is an organization that collects or assembles information on consumers for a fee. A company that compiles criminal record data that sells that data for conducting employment background checks is a CRA.

• Consumer Report.

  A consumer report is a report prepared by a CRA that includes information on an applicant’s or employee’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living and is used or expected to be used for employment purposes. A consumer report could include:

  • a Criminal Record Check

  • a Civil Record Check

  • a Motor Vehicle Record Check

  • Education Verifications

  • Employment Verifications

• Investigative Consumer Report.  

An Investigative Consumer Report is a special type of consumer report that is gathered from personal interviews of neighbors, friends, associates, or current and past employers that may have information bearing on the applicant’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living and is used or expected to be used for employment purposes. This means that an Investigative Consumer Report is NOT a Criminal Background Check but could be:

• Personal Reference Checks

• Professional Reference Checks

It is critical to understand the definitions because the FCRA has very specific requirements for employers who use Consumer Reports or Investigative Consumer Reports.

Would you like for us to audit your employment screening program?  

You can email us at clientservices@safehiringsolutions.com or call toll free 866-434-0002.