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Fair Credit Reporting Act Basics
Fair Credit Reporting Act Basics
Fair Credit Reporting Act Basics
Fair Credit Reporting Act Basics
Fair Credit Reporting Act Basics
Fair Credit Reporting Act Basics
Fair Credit Reporting Act Basics
Fair Credit Reporting Act Basics
Fair Credit Reporting Act Basics
Fair Credit Reporting Act Basics
Fair Credit Reporting Act Basics
Fair Credit Reporting Act Basics
Fair Credit Reporting Act Basics
Fair Credit Reporting Act Basics
Fair Credit Reporting Act Basics
Fair Credit Reporting Act Basics
Fair Credit Reporting Act Basics
Fair Credit Reporting Act Basics
Fair Credit Reporting Act Basics
Fair Credit Reporting Act Basics
Fair Credit Reporting Act Basics
Fair Credit Reporting Act Basics
Fair Credit Reporting Act Basics
Fair Credit Reporting Act Basics
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Fair Credit Reporting Act Basics

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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. …

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.

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  • 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  

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