FCRA (Fair Credit Reporting Act)
The Fair Credit Reporting Act (FCRA) is a federal law that regulates how consumer information, including background checks, is collected and used by employers, landlords, and credit agencies. In employment screening, the FCRA ensures that background reports are accurate, obtained with consent, and used fairly when making hiring or employment decisions.
Compliance note
- Employers must obtain written authorization from a candidate before requesting a background check from a consumer reporting agency.
- Applicants must receive clear disclosure of their rights under the FCRA, including a standalone disclosure form separate from other employment materials.
- If adverse action is taken based on background results, employers must follow the two-step process: provide a pre-adverse action notice with a copy of the report, then a final post-adverse action notice.
- Applicants have the right to dispute inaccurate or incomplete information through the consumer reporting agency, which must reinvestigate and correct errors promptly.
Related Terms and Posts
- Consumer Report
- Investigative Consumer Report
- Disclosure and Authorization
- Pre-Adverse Action
- Post-Adverse Action
- Background Checks in 2025: What Employers Need to Know (Blog)
- Adverse Action in Employment Background Checks (Blog)
- Ensuring Legal Compliance in Retail Background Check Consent Forms (Blog)
Frequently Asked Questions
Q: What does the FCRA regulate in background screening?
A: The FCRA governs how consumer reporting agencies and employers collect, share, and use background information to ensure accuracy, transparency, and fairness.
A: The FCRA governs how consumer reporting agencies and employers collect, share, and use background information to ensure accuracy, transparency, and fairness.
Q: What are an applicant’s rights under the FCRA?
A: Applicants have the right to consent before a background check is run, to receive a copy of their report, and to dispute any inaccurate or incomplete information.
A: Applicants have the right to consent before a background check is run, to receive a copy of their report, and to dispute any inaccurate or incomplete information.
Q: What happens if an employer violates the FCRA?
A: Violations can result in civil liability, regulatory fines, or class action lawsuits for improper disclosure, authorization, or adverse action procedures.
A: Violations can result in civil liability, regulatory fines, or class action lawsuits for improper disclosure, authorization, or adverse action procedures.
DISCLAIMER: The information provided in this glossary is for general informational purposes only and should not be construed as legal advice. While we strive for accuracy, EDIFY Background Screening does not guarantee that the definitions or explanations are complete, up to date, or error-free. Employers should always consult with competent legal counsel to ensure compliance with applicable laws and regulations.
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