FCRA Compliance


Step 1: Before You Get A Consumer Report

Before you can order a consumer report for employment purposes, you must notify the individual in writing – in a document consisting solely of this notice – that you are using the report in making your decisions. You must also get the person’s written authorization before you ask a CRA for the report. (Special procedures apply to the trucking industry, medical industry, etc). If you want the authorization to allow you to get consumer reports throughout the person’s employment, make sure you say so clearly and conspicuously. It’s a good idea to review applicable laws of your state related to consumer reports as some states restrict the use of consumer reports – usually credit report – for employment purposes.

Step 2: Before You Take Adverse Action

If you rely on a consumer report for an “adverse action” – denying a job application, reassigning or terminating an employee, or denying a promotion – be aware of the following:

Before you take the adverse action, you must give the individual a pre-adverse action disclosure that includes a copy of the individual’s consumer report and a copy of “A Summary of Your Rights Under the Fair Credit Reporting Act” – a document prescribed by the Consumer Financial Protection Bureau (CFPB). The CRA that furnishes the individual’s report will give you the summary of consumer rights. Horizon Background Screening can provide you with a Pre-Adverse Action Letter to give to your applicants.

Step 3: After You’ve Taken Adverse Action

After you’ve taken an adverse action, you must give the individual notice that you have taken the adverse action. The notice must include:

  • the name, address, and phone number of the CRA that supplied the report
  • a statement that the CRA that supplied the report did not make the decision to take the adverse action and cannot give specific reasons for it
  • a notice of the individual’s right to dispute the accuracy or completeness of any information the agency furnished and his or her right to an additional free consumer report from the agency upon request within 60 days
  • a complete copy of the background check that was used in making the hiring decision

Horizon Background Screening can also provide you with a template for the Post-Adverse Action Letter. In any case where information in a consumer report is a factor in your decision – even if the report information is not a major consideration – you must follow the procedures mandated by the FCRA. You must provide the applicant a pre-adverse action disclosure before you reject his or her application and when you formally reject the applicant, you must provide an adverse action notice. While this is obvious duplication, it is required by the FCRA


There are legal consequences for employers who fail to get an applicant’s permission before requesting a consumer report or fail to provide pre-adverse action disclosures and adverse action notices to unsuccessful job applicants. The FCRA allows individuals to sue employers for damages in federal court and may be entitled to recover court costs and reasonable legal fees. The law also allows individuals to seek punitive damages for deliberate violations. In addition, the Federal Trade Commission, other federal agencies, and the states may sue employers for noncompliance and obtain civil penalties.

Additional Information

Once you have completed the ‘pre adverse action’ process outlined in the Fair Credit Reporting Act, the Equal Employment Opportunity Commission (EEOC) also requires that you conduct an individualized assessment prior to taking adverse action. An overview of this assessment procedure, along with the correlating requirements of a written policy on the use of criminal records in employment decisions, can be found at the EEOC Guidance Site and the EEOC Employers Information Page.


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