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FCRA Requirements for Using a Consumer Report for Employment Purposes

Question: What requirements do we need to follow when using a consumer report to make an employment decision?

Response & Analysis:

Enacted by Congress in 1970 and subsequently amended a number of times, the Fair Credit Reporting Act (“FCRA”) governs the collection, compilation and use of consumer report information. While most people associate the FCRA with the regulation of credit reports used to apply for home mortgages, credit cards and car leases, the FCRA has evolved into much more, and is now the primary law detailing the procedures that must be followed when consumer reports—which include credit reports and criminal background checks—are used for employment purposes.

In preparing consumer reports, the FCRA mandates that consumer reporting agencies (“CRAs”) follow “reasonable procedures to assure maximum possible accuracy.” Because of the widespread use of consumer reports in major personal decisions like employment, accuracy is paramount.

The basic mechanics of the FCRA that must be followed when using a consumer report to make an employment decision are as follows:


In order to ensure that the applicant/employee understands that a consumer report may be obtained, and that information contained in it may be used for decisions related to employment, you must provide “clear and conspicuous” written disclosure to them in a standalone document that consists solely of such disclosure. You must avoid including any extraneous information.


You must obtain the written permission of the consumer to procure the consumer report. This authorization—typically a signature line confirming the consumer’s authorization—may be contained in the same document as the disclosure, but must be separate from the employment application.


You must have a “permissible purpose” to obtain a consumer report; in this case, it is “for employment purposes” (limited to “employment, promotion, reassignment, or retention”). You must certify to the CRA preparing the consumer report that you have provided disclosure to the consumer and obtained his or her consent, that you have complied and will continue to comply with all FCRA requirements with respect to the consumer report and that you will not use the information in violation of any applicable federal or state equal employment opportunity law or regulation.


If the consumer report contains any information which may, in whole or in part, be used to take any adverse action against the consumer, you must provide the consumer with all of the following information prior to taking any adverse action:

  • A pre-adverse action notice;
  • A copy of the consumer report; and
  • A “Summary of Rights” under the FCRA.
The purpose of the pre-adverse notification is to provide the consumer with the opportunity to review, dispute and correct any inaccurate or incomplete information and/or to explain any negative information contained in the report. While the FCRA does not specify how long an employer should wait after sending the preadverse notification before making a final determination, the little guidance provided states that waiting at least five business days is reasonable.


If you decide to take adverse action against a consumer based on any information contained in the consumer report, you must provide the consumer with notice either orally, in writing or electronically, that must include all of the following information:

  • Notice of the adverse action;
  • The name, address and telephone number of the CRA that furnished the consumer report;
  • A statement that the CRA did not make the decision to take the adverse action and is unable to provide the specific reasons for it; and
  • A notice of the consumer’s right to dispute the accuracy or completeness of any information the CRA furnished, and to obtain an additional free consumer report from the CRA if requested within sixty (60) days.

Additional state FCRA laws may also apply.


It is important to keep in mind that there may be additional requirements on employers under state consumer reporting laws. For example, there are requirements in California, Minnesota and Oklahoma that an employer include a checkbox on their job applications that allows the applicant/employee to request a copy of his or her report when a consumer report is ordered.¹

1 See Cal. Civ. Code §§ 1785.20.5 & 1786.16 ; M.S.A. § 13C.02; 24 Okl. St. Ann. § 148.

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This document and/or presentation is provided as a service to our customers. Its contents are designed solely for informational purposes, and should not be inferred or understood as legal advice or binding case law, nor shared with any third parties. Persons in need of legal assistance should seek the advice of competent legal counsel. Although care has been taken in preparation of these materials, we cannot guarantee the accuracy, currency or completeness of the information contained within it. Anyone using this information does so at his or her own risk.

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