The House of Representatives is reviewing a reform bill that may lead to significant changes to the Fair Credit Reporting Act (FCRA), as reported by the Consumer Data Industry Association earlier this month. These changes will directly affect how consumer reporting agencies (CRAs) like Subrosa report information in our employment background checks. Most notably are the following potential amendments:
- Adding multiple new requirements to the FCRA dispute process;
- Giving credit repair companies new tools to challenge information on credit reports;
- Banning the use of credit reports in private employment decisions;
- Shortening the obsolescence period of information on reports from seven years to four; and
- Reducing the amount of time bankruptcies can stay on a record from 10 years to seven.
The purpose of the Consumer Financial Protection Bureau (CFPB) and some of these potential updates is to ensure accuracy and protection for consumers as well as the users of consumer information. With increased reliance on technology and sharing of data in the background check industry, the risks for inaccuracy and identity theft are higher than ever. So too are the chances of an employer falsely denying employment to an applicant based on inaccurate information in their background check; an issue that continues to lead companies in to class action lawsuits.
Therefore, it is important that FCRA guidelines are followed no matter what, particularly those regarding the Adverse Action process; which gives the consumer a chance to review their background check report for accuracy before an employer officially dismisses them for employment. It is also vital that employers ensure that their background checking provider, the CRA, is knowledgeable and current in the latest in FCRA practices.
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