FTC Issues Guidance on Consumer Reporting Obligations under the FCRA

FTC FCRA

On May 10, the FTC released new guidance on consumer reporting obligations under the FCRA. The guidance is intended to assist companies in understanding whether or not they are subject to consumer reporting requirements under the FCRA. According to the FTC, a company that sells or provides “consumer reports” as defined in Section 603 of the FCRA, 15 U.S.C. § 1681a(d), is considered a “consumer reporting agency” bound by FCRA requirements: “even if you don’t think of your company as a consumer reporting agency, it may be one if it provides information about people to employers for use in hiring or other employment decisions.” The guidance further notes that employment background screening companies are typically subject to FCRA requirements, such as: (i) establishing and following “‘reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates’”; (ii) obtaining certifications that verify, among other things, their clients are legitimate and that the credit report will only be used for employment purposes; (iii) providing clients with information regarding their responsibilities under the FCRA, as well as a summary of consumer rights under the FCRA; and (iv) honoring certain rights of applicants and employees, including providing access to files upon request and conducting a reasonable investigation of consumer disputes.