Federally mandated Laws, in place to protect consumers, play a major role in your defense! These laws are clear and you must abide by them to protect your company. The Fair Credit Reporting Act (FCRA) requires compliance with certain regulations. It is your responsibility to know the rules of engagement, “no excuses”.

 

Terms and Conditions (PDF)


"You cannot escape the responsibility of tomorrow by evading it today."
- Abraham Lincoln

FCRA Overview
This overview of the Fair Credit Reporting Act (FCRA) addresses requirements related to the employment/tenant background screening process and is provided only as general guidance to NAPS customers. It is neither intended as legal advice nor as a sole educational tool for the employer's staff. You, as the landlord or employer, retain the responsibility to understand the FCRA and educate your staff involved in the screening process. For a full copy of the FCRA or details of the Obligations of Users under the FCRA, click on the links below or you can visit the Federal Trade Commission's (FTC) Website. http://www.ftc.gov

The FCRA was enacted to help protect consumers in the consumer reporting process by regulating what is reported. The FCRA requires end users to take certain actions when it obtains a consumer report through a consumer-reporting agency. The following procedures are designed to help landlords and employers comply with the FCRA. Because the information contained herein is general in nature and is neither complete nor necessarily applicable to your specific circumstances, please consult your legal counsel for guidance.

Fair Credit Reporting Act (PDF)  |  Obligations of Users Under the FCRA (PDF)  |  Consumer's FTC Summary of Rights (PDF)


Important Notice:
Before you can order a consumer report from NAPS, FCRA mandated compliance procedures must to be taken by the (End User) to gain access to consumer reports.

Step 1. Certify to NAPS, Inc.
The “End User” must certify in writing to NAPS your permissible purpose for the use of consumer reports. The “End User” must also certify that you will comply with: (i) the FCRA requirements of providing a written disclosure and obtaining a written authorization from the applicant; (ii) all pre-adverse and adverse action procedures; and (iii) not using the consumer report in violation of any equal opportunity laws or any other laws.  For more information on certification click here (PDF).

Step 2. Provide Disclosure to Applicant
Provide a clear and conspicuous disclosure in writing to the applicant in a “document that consists solely of the disclosure”, stating that a consumer report may be obtained for tenant or employment purposes. This disclosure must be in a separate document and cannot contain any additional information except for the consumer's authorization. Please note that the Disclosure cannot be made a part of any other form including the tenant or employment application.

Step 3. Obtain Authorization from Applicant
”End User” must obtain written authorization from the applicant prior to gaining access to a consumer report. The Authorization may be obtained in the same document as the disclosure, which is an exception to the general rule that “the disclosure must be in a separate document that consists solely of itself”. In fact, some FTC opinions have found that having the authorization on the disclosure heightens the consumer's awareness to the disclosure and furthers its purpose. Therefore, one of the ways to comply with the disclosure and authorization requirements is to include the authorization on the same document as the disclosure but keep this combined document “separate and apart” from the rental/employment application form. Another method of compliance is to use two separate documents, having both the disclosure and the authorization separately obtained.

The type of background check you are running will determine the type of authorization & consent you will need to obtain. If you are requesting a verification of the facts and do not go beyond the facts, then a standard disclosure and the authorization is acceptable.

In some cases, you may order a report for employment purposes that would also constitute an “investigative consumer report.” (In general, an investigative consumer report is one in which information has been obtained through personal interviews with friends, neighbors, or associates of the Applicant or others with whom the Applicant is acquainted or who may have knowledge concerning any such items of information, and the information is more than just a verification of facts.) In the event that you order any investigative consumer report, then an investigative consumer report disclosure and consent is required.

If you operate in California or order a report on a California resident, in addition to the other certifications required, you must certify for each California report ordered that:

  • You will identify the CRA including the name, address, and telephone number to the Applicant when you provide the disclosure to or obtain the consent from the Applicant.
  • You will provide a disclosure with a box that can be checked by the Applicant to indicate that he/she wants to obtain a free copy of the Report and you will send such a copy within three (3) business days of your receipt of the Report if the box is checked; and
  • You will provide the Applicant a summary of his or her rights under California Civil Code Section 1786.22.

Below, you will find the different types of disclosure & authorization forms. It is the “end user’s” responsibility to determine the type of authorization required for your intent and purpose. It is recommended you consult with your legal counsel to ensure that your forms, policies and procedures related to the use of CRA-provided information are in compliance with applicable state and federal laws.

Sample Disclosure & Authorization Forms
Employment Consumer Report
Investigative Consumer Report
California Consumer Report
Tenant Consumer Report

 

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Step 4. Pre-Adverse Action Procedures
Not only does the denial of tenancy or employment fall under the Fair Credit Reporting Act’s definition of "adverse action", but any other decision for employment purposes, which adversely affects any current or prospective employee will constitute an adverse action.*  If the consumer report provides information that will negatively influence the employment opportunities of the applicant, whether in whole or in part, you must perform “ALL” of the following “BEFORE” such an adverse action is made:

  • Provide the applicant/employee with a pre-adverse notification, either orally, in written form or electronic communication.
  • Provide the applicant/employee with a copy of the consumer report.
  • Provide the applicant a description in writing of their rights under the FCRA as prescribed by the FTC in either written form or electronic communication.

Sample Employment Pre-Adverse Action Notification
Sample Report
FTC Summary of Consumer Rights
FTC Summary of Consumer Rights (CA)

The above pre-adverse action process allows the applicant the opportunity to dispute any negative information contained in the report. The employer should allow a reasonable amount of time for the applicant to respond to this pre-adverse notification before final determination is made or adverse action is taken.

Step 5. Adverse Action Procedures
If a landlord or employer decides to take any adverse action (such as not renting or employing the applicant), based in whole or in part, on the information revealed in the consumer report, you must perform the following, either in writing, orally or electronically* (we recommend written documentation).

  • Provide the applicant with an adverse action notification*, either orally, in written form or electronic communication.
  • Provide to the applicant, the name, address and telephone number, including a toll-free number, of the consumer-reporting agency.
  • Include a statement that "the consumer-reporting agency did not make the decision to take the adverse action and is unable to provide the applicant the specific reasons why the adverse action was taken".
  • Provide notice to the applicant of his/her right to obtain within (60) sixty days, a free copy of the consumer report from the consumer-reporting agency.
  • Provide notice to the applicant of their right to dispute, with the consumer-reporting agency, the accuracy or completeness of any information in a consumer report furnished by the consumer-reporting agency.

Sample Employment Adverse Action Notification
Sample Tenant Adverse Action Notification

Some variances exist for non-written consent for the trucking industry*

Please be aware that some states have compliance requirements in addition to the FCRA. For example, in the states of Minnesota and Oklahoma, you must provide the applicant a written disclosure containing a box the applicant may check if they want to obtain a copy of the consumer report. California has a similar requirement except it is limited to consumer credit reports*

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*LEGAL NOTICE: NAPS is not acting as legal counsel and cannot provide legal advice. Customers should recognize the importance of working with counsel to develop an employment/tenant screening program specific to their needs. NAPS encourages its customers to work with their legal counsel to ensure that client’s policies and procedures related to the use of CRA-provided information are in compliance with applicable state and federal laws.


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