What You Need to Know About the FCRA
While ensuring compliance with the Fair Credit Reporting Act might seem like a hassle for employers and hiring managers alike, it’s important to consider that the FCRA exists to protect us.
History and Purpose
The law, passed in the 70s, regulates the use of consumer information with the goal of promoting accuracy, fairness, and privacy, and preventing abuse. Otherwise, Credit Reporting Agencies could release credit information indefinitely and indiscriminately. The FCRA allows for one free credit report per year and limits the amount of time negative information can remain on consumer reports. This way, bankruptcies, late payments, and tax liens from decades past can’t continue to impair consumers’ ability to qualify for jobs, loans, and credit.
The FCRA additional prohibits creditors from basing financial decisions on non-pertinent or biased information, like:
- sexual orientation
- marital status
- drinking habits
Who the FCRA Affects
Everyone with a credit rating who wishes to be employed is under the purview and protection of the FCRA. And employers seeking out consumer credit information to inform their hiring decisions must maintain compliance with the FCRA in order to protect themselves from liability.
Additionally, employers, creditors, and others are affected by the FCRA in the requirement that consumers are provided with the name of the company filing the report and whether negative action is taken based on the results of the report. Consumers must also provide written consent before a report is run.
Penalties of Non-compliance
Creditors and employers can be sued if found not to be in compliance with FCRA regulations. The importance of maintain compliance cannot be stressed enough. To make sure your organization maintains compliance, contact Victig and learn more about how your organization’s employee screening policies measure up.