Navigating the vast world of FCRA compliance can be overwhelming and confusing to say the least, not to mention the high stakes of noncompliance. Failing to abide by FCRA regulations puts your organization at risk for a potentially expensive and reputation-damaging lawsuit. But don’t worry! Tenant Score, powered by True Hire, has compiled the information below to get you started on your way to understanding FCRA compliance.

DISCLAIMER: This blog is being provided for general information purposes only and should not be construed as legal advice. For legal advice, please contact an attorney directly.

What does FCRA stand for?

The Fair Credit Reporting Act (FCRA) is U.S. Federal Government legislation enacted to promote the accuracy, fairness, and privacy of consumer information contained in the files of consumer reporting agencies. It was intended to protect consumers from the willful and/or negligent inclusion of inaccurate information in their credit reports.

What does it mean to be FCRA compliant?

The FCRA regulates the collection, dissemination, and use of consumer information, including consumer credit information. Businesses must abide by the FCRA regulations to be compliant.

How do I stay FCRA compliant?

The Equal Employment Opportunity Commission (EEOC) and the Federal Trade Commission (FTC) teamed up to create this comprehensive publication to help landlords understand the nitty-gritty of the FCRA when it comes to hiring. You can read important points from the publication below.

What is adverse action?

Adverse action is not renting to an individual or evicting a tenant based on background information obtained through a company in the business of compiling background information.

Do the same background laws apply to contractors?

Yes. According to a 2011 report released by the FTC entitled 40 Years of Experience with the Fair Credit Reporting Act: An FTC Staff Report with Summary of Interpretations, background checks conducted on contractors are considered for “employment purposes”.  See page 32 of the report.

Do states have their own consumer reporting laws?

Yes, some states have their own consumer reporting laws in addition to the federal laws. Click here for an overview of each state’s regulations.

How does Tenant Score help companies maintain FCRA compliance with their background check process?

Tenant Score ensures FCRA compliance in all 50 states to provide our customers the highest level of protection.  We have tailored disclosure forms that comply with specific state and federal laws.  We also have an FCRA Compliance Program that covers adverse action, updates on federal & state laws and regulations, and other tools to ensure clients are making informed decisions about prospective and tenants. See below for more information on the specific ways Tenant Score helps businesses and landlords maintain FCRA compliance when it comes to background screening.

Directly from the publication on FCRA compliance released by the EEOC and the FTC, some key points of the FCRA are listed below, but because all the information in the FCRA is important, we recommend you read the entire publication, as well as the actual FCRA law.

Before You Get Any Background Information

• Abide by the Equal Employment Opportunity (EEO) laws. For example, it’s illegal to check the background of applicants and tenant when that decision is based on a person’s race, national origin, color, sex, religion, disability, genetic information (including family medical history), or age (40 or older).
• Tell the applicant or tenant you might use the information for decisions about his or her ability to rent the property. This notice must be in writing and in a stand-alone format. The notice can’t be in a rental application.
• Tell the applicant or tenant of his or her right to a description of the nature and scope of any “investigative report”—a report based on personal interviews concerning a person’s character, general reputation, personal characteristics, and lifestyle.
• Get the applicant’s or tenant’s written permission to do the background check. This can be part of the document you use to notify the person that you will get the report. If you want the authorization to allow you to get background reports throughout the person’s tenancy, make sure you say so clearly and conspicuously.

Using Background Information

• Again, apply the same standards to everyone, regardless of their race, national origin, color, sex, religion, disability, genetic information (including family medical history), or age (40 or older).
• Before you take an adverse action, you must give the applicant or tenant a notice that includes a copy of the consumer report you relied on to make your decision as well as a copy of “A Summary of Your Rights Under the Fair Credit Reporting Act,“ which you should have received from the company that sold you the report.
• After you take an adverse action, you must tell the applicant or tenant (orally, in writing, or electronically)that he or she was rejected because of information in the report, and they have a right to dispute the accuracy or completeness of the report. He or she can get an additional free report from the reporting company within 60 days.

Disposing of Background Information

• Any records you make or keep (including all application forms, regardless of whether you rented to the applicant, and other records related to tenancy) must be preserved for one year after the records were made, or after a personnel action was taken, whichever comes later. This requirement may be extended for educational institutions and for state and local governments.
• Once you’ve satisfied all applicable recordkeeping requirements, you may dispose of any background reports you received; however, the law requires that you dispose of the reports—and any information gathered from them—securely.

How Tenant Score Can Help your Company Maintain FCRA Compliance

Tenant Score works diligently to help you navigate the ever-changing regulatory landscape of the background screening industry. Here’s what our commitment to compliance means for your organization:

• Access to more than 20 years’ worth of industry expertise when it comes time to choose a screening program.
• Fully-vetted background authorization and disclosure packets tailored to comply with state and federal law.
• Industry-leading tools for managing your adverse action letters.
• Robust technology capabilities for color-coding results to fit your criteria matrix.
• Full compliance reviews of your current processes and documentation.
• Updates on major changes to regulations at the federal, state, and local level.
• Customized screening services to keep you compliant with industry-specific regulations

Resources & Downloads

Fair Credit Reporting Act

EEOC/FTC joint publication on FCRA compliance (contains additional resources)

40 Years of Experience with the Fair Credit Reporting Act: An FTC Staff Report with Summary of Interpretations

State Specific Consumer Reporting Laws

Compliance Checklist

Compliance Shield Products Flyer

Applicant Summary of Rights

Have Questions?

EEOC
www.eeoc.gove
info@eeoc.gov
800-669-4000

FTC
www.business.ftc.gov
1-877-382-4357

Tenant Score
info@true-hire.com
800-262-7301

Or contact your legal counsel

Sources:

40 Years of Experience with the Fair Credit Reporting Act: An FTC Staff Report with Summary of Interpretations. Federal Trade Commission.

Background Checks: What Employers Need to Know. Equal Employment Opportunity Commission and the Federal Trade Commission.

Workplace Class Action Blog. Seyfarth Shaw.