You have spent time and resources looking for just the right candidate for your open position. You finally found the person you want to hire, but there is still the background process to go through. You get the final report.  Something came up on your applicant’s background check, now what? As stated by George Bernard Shaw, “Beware of false knowledge; it is more dangerous than ignorance.” What does the warning from Mr. Shaw have to do with the background report? An item that shows up on the report could be “false knowledge.” To avoid this danger, you have to give your applicant the opportunity to dispute the information.

Section 611 of the Fair Credit Reporting Act (FCRA) addresses the procedure for disputing the accuracy of a background report. Once an applicant has directly, or indirectly through the reseller, notified an agency of a dispute, a reinvestigation to determine the accuracy of the information is conducted free of charge and is to be completed within a 30 day period beginning on the date of notification. A period of no more than 15 additional days may be added if the consumer provides information relevant to the reinvestigation during the initial 30 days. While you may be anxious to get the position filled, doing so without staying in compliance with the FCRA can cause a bigger problem for your company than an open position.

In accordance with the FCRA 604 (b)(3)(A), the Pre-Adverse Action process must be followed before making any final decisions based on the information contained in the report. The first step is to provide your applicant with a copy of the background report (make sure to provide the report without irrelevant attachments such as sample letters or notifications from states that do not apply to the applicant), a copy of the FCRA Summary of Rights, and a Pre-Adverse Action letter. The letter is to include:

1)    Notification that an adverse employment action may be taken based in whole or in part on the report;

2)    The name, address, and telephone number of the Consumer Reporting Agency (CRA; the background company) that provided the report, including a toll free number established by the agency if the agency compiles and maintains files on consumers on a nationwide basis; and

3)    A statement that the CRA did not make the decision to take the adverse action and is unable to provide the consumer with the specific reasons why the adverse action was taken.

See the FCRA document for a complete list of requirements for Pre-Adverse and Adverse notifications.

You must give your applicant at least five business days from the receipt of the notification to start the dispute process for any item(s) in question.

The CRA will notify the requestor of the report if/when the applicant has initiated the dispute process. Both the subject of the report and the requestor will be notified of any progress on the dispute up to and including the final disposition. If the items in dispute are removed from the report, a new report will be sent to the requestor.

If the applicant does not contact the employer or the CRA, and the five business day period has passed, the Adverse Action process can be completed. 

The Adverse Action process is similar to the Pre-Adverse Action process. Notification is to be given to the applicant that an adverse action is being taken based on the report. The communication is to include the same information regarding the CRA as the pre-adverse action letter as well as notification that they are entitled to a free copy of the of their report if they submit a written request to the CRA within 60 days of receiving the notice.

Follow the FCRA and avoid the danger.

Source:  https://www.bulkorder.ftc.gov/system/files/publications/pdf-0111-fcra.pdf