The Fair Credit Reporting Act (FCRA) is rarely at the top of most employers’ and HR professionals’ concerns. In fact, many don’t know much at all about what it’s even supposed to do! However, mistakes that result in non-compliance with the FCRA can end up being very costly, indeed—to the tune of tens of millions of dollars in some cases. That’s costly enough to turn out the lights at most companies.
The majority of companies don’t fail FCRA compliance on purpose, of course. But as with all strict procedures, there are a lot of areas where noncompliance can occur. These errors generally fall into three categories:
1. Not paying close-enough attention to detail in forms and reporting
Extensive paperwork and FCRA compliance go hand in hand. Paperwork can be tedious, which can lead to looking for loopholes. Typically, that means minimizing the number of forms you require applicants to sign by combining similar items for their consent. Unfortunately, there isn’t an easy way out when it comes to FCRA compliance. All forms are necessary.
The FCRA’s notice and consent procedures are prescribed with exacting detail, down to the correct font size. If you understand all the rules and make compliance a routine, your organization will be better off in the long run.
2. Lax notice and consent processes
The employment application ALWAYS needs to ask potential employees for written consent before a candidate’s background check. Some companies ask, but only after a background check company runs the reports. Getting these two steps out of order violates FCRA policy and can put your company at risk of a stiff fine or lawsuit. Also, keep in mind separate forms are needed for requesting written consent to credit or criminal history screening. Never try to combine them!
3. Poor handling of adverse actions on negative reports
The FCRA ensures that a specific notification process is in place to allow the applicant or employer time to respond to and correct an inaccurate report. We recommend waiting six business days between notices. Do not, under any circumstances, skip this step.
In truth, it takes an expert to keep abreast of all the ways a business can run afoul of the FCRA. That’s why every business should hire a seasoned team of pre-employment professionals like KRESS. We keep our clients safe and secure from the potential fallout from a background check error that violates the FCRA. If you’re ready to rest easy knowing we’ve got your compliance well in hand, contact us today for a consultation!