The Federal Trade Commission told the Equal Employment Opportunity Commission on Wednesday that the Fair Credit Reporting Act (FCRA) imposes requirements on Consumer Reporting Agencies (CRAs) - which include the three major credit bureaus - and on employers that use the information “to ensure that sensitive consumer report information is used with fairness, impartiality and respect for consumers’ privacy.”

The testimony given by Maneesha Mithal, associate director of the FTC’s Division of Privacy and Identity Protection, states that FCRA requirements placed on CRAs and employers are designed to promote privacy, accuracy and fairness in the use of consumer reports.

For example, before giving a consumer report to an employer, the CRA must take steps to ensure that the employer has a legitimate basis to obtain the report; must inform the employer of his or her obligation to provide certain notices to consumers; and must obtain the employer’s certification that he or she is complying with the FCRA and will not use consumer report information in violation of equal opportunity laws.

The testimony notes that employers have important obligations if they use consumer reports for employment, including getting written consent from the employee or prospective employee before getting a report. Employers also have to tell employees or prospective employees when they take adverse actions against them based on information in a consumer report – such as denying job applications, reassigning or terminating employees or denying a promotion.

The testimony describes the FTC’s law enforcement measures to assure consumers’ rights under the FCRA are protected. The testimony also notes that the FTC has a robust consumer and business education effort, which it considers a critical part of its mission.

The FTC’s consumer publication, “Employment Background Checks and Credit Reports,” explains to applicants and employees their rights under the FCRA with respect to the use of credit reports and other employment background checks. The FTC has issued a guide for businesses, “Using Consumer Reports: What Employers Need to Know,” on how to comply with the FCRA when using consumer reports in employment.

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