UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON, D.C. 20580
|Division of Credit
Clarke W. Brinckerhoff
June 9, 1998
Ms. Gail Goeke
LATHROP & GAGE
2345 Grand Boulevard
Kansas City, MO 64108
Re: Criminal records checks
-- FCRA §§603(d), 603(f), 607(e)
Dear Ms. Goeke:
This responds to your letter concerning
the application of the amended Fair Credit Re-porting Act ("FCRA")
to criminal records checks done for employ-ment purposes. You
report that state law requires certain employers (including members
of the hospital association you represent) to request criminal
records checks on employees within two working days of their hiring.
Employers comply by obtaining from the Highway Patrol for $5.00
a list of convic-tions, which you have told us is public data
available for that fee to anyone. Your questions and the response
of the Commission staff are set forth below.
1. When a hospital employer, in compliance
with state law, requests a criminal records check from the State
Highway Patrol, must the employer comply with the FCRA?
No. In our view, a state agency that is
providing information that is generally available to the public
should not be considered a "consumer reporting agency"
(CRA) under the FCRA, and the communication of that data by such
an agency to an employer or other party should not be considered
a "consumer report." While it is possible to interpret
the very broad terminology in the definitions of those two terms
set forth in Sections 603(d) and 603(f) to cover such public record
sources,(1) some FCRA provisions
cannot be sensibly applied to them. Most significantly, such public
agencies could provide data only to parties who need it for a
"permissible purpose" as defined in Section 604 of the
FCRA,(2) which would be entirely
con-trary to their basic mission as a source of public record
information.(3) Therefore, if treated
as CRAs, they would be forced to refuse access to parties who
seek criminal records information for such common and useful purposes
as research and journalistic endeavors, or for aid in law enforcement.
2. Is the Highway Patrol required to
limit the information to seven years?
No. This question highlights one of the
reasons it is inadvisable to consider public rec-ord offices to
be CRAs. Section 605 of the FCRA prohibits consumer reporting
agencies from reporting adverse information to employers if it
is more than seven years old. If criminal rec-ords sources were
considered to be CRAs, they would thus be forbidden by Section
605 from telling any employer about an applicant's 7½-year-old
felony conviction. There is nothing in the legislative history
to indicate that Congress intended to require the Highway Patrol
to with-hold important publicly available conviction information,
even if it is over seven years old.
3. If the hospital association sets
up a company to serve as a conduit to funnel criminal records
requests from employer hospitals to the Highway Patrol, and the
reports from the Patrol to the hospitals for a slight fee, does
the company become a reseller under the FCRA?
No. Section 607(e), the provision that
imposes duties on resellers, applies only to those who "procure
a consumer report for purposes of reselling the report
. . ." (emphasis added). Because the Highway Patrol would
not be making a "consumer report" to the conduit, it
is our view that the conduit would not be a reseller subject to
this provision if its function was only to "funnel criminal
records requests from employer hospitals to the Highway Patrol"
as you indicate.(4)
Section 607(e)(1) requires a reseller to
disclose to a CRA both the identity of the end-user of the report
and each permissible purpose. Neither of these disclosures can
be sensibly applied to a party consulting a public source that
makes information available to all comers, such as the five-dollar
Highway Patrol report discussed in your letter. The Highway Patrol
must sell the information to anyone; it thus has no reason to
know the identity,(5) or purpose,
of the end-user of the report.
The opinions set forth in this informal
staff letter are not binding on the Commission.
Clarke W. Brinckerhoff
1. Section 603(d)(1)
The term "consumer report"
means any written, oral, or other communication of any information
by a consumer reporting agency bearing on a consumer's credit
worthiness, credit standing, credit capacity, character, general
reputation, personal characteristics, or mode of living which
is used or expected to be used or collected in whole or in part
for the purpose of serving as a factor in estab-lishing the
consumer's eligibility for (A) credit or insurance to be used
primari-ly for personal, family, or household purposes; (B)
employment purposes; or (C) any other purpose authorized under
Section 603(f) states:
The term "consumer reporting
agency" means any person which, for monetary fees, dues,
or on a cooperative nonprofit basis, regularly engages in whole
or in part in the practice of assembling or evaluating consumer
credit information or other information on consumers for the
purpose of furnishing consumer reports to third parties, and
which uses any means or facility of interstate commerce for
the purpose of preparing or furnishing consumer reports.
2. Section 604
is designed to protect consumers' privacy interest in the files
of credit bu-reaus and other consumer reporting agencies by limiting
access to that data to parties who have one of the enumerated
"permissible purposes" for the information. The most
common purpose is afforded to a business (creditor, employer,
insurer, landlord) to evaluate a consumer's application. The other
listed purposes are the order of a court, written authorization
of the con-sumer, review of an employee or credit account holder,
and review by certain governmental authorities in order to establish
or enforce a child support obligation.
if public sources such as the Highway Patrol were CRAs, Section
609(a)(3) would require them to develop the capacity to tell every
individual how many parties had checked his or her criminal history
within the last 1-2 years. See footnote 5, below.
4. Although the
conduit would not be a reseller subject to Section 607(e), it
would probably be a "consumer reporting agency" as defined
in Section 603(f), quoted in footnote 1 above, and thus subject
to other FCRA provisions applicable to CRAs. The enclosed opinion
letters (LeBlanc, 6/9/98;
Islinger, 6/9/98) discusses that
issue in some detail.
the identity of the end user is critical to allow a credit
bureau to comply with its duty to disclose to consumers the
identities of recipients of their credit history under Section
609(a)(3). This information enables consumers to know if some
party obtained their credit history improperly.