UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON, D.C. 20580
August 5, 1998
Frank S. James III, Esq.
420 N. 20th St., Suite 1600
Birmingham, Alabama 35203-5202
- Re: Section 604(b)(2) of the Fair Credit Reporting Act
Dear Mr. James:
This is in response to your letter requesting a staff interpretation
of Section 604(b)(2) of the Fair Credit Reporting (FCRA). This
section requires employers to disclose to employees and applicants
for employment the fact that consumer reports may be procured
and to obtain written permission before any consumer report is
obtained. You ask whether it is permissible under Section 604(b)(2)
for an employer to make a one-time disclosure to applicants and
current employees and to obtain written permission at that time
covering any consumer report obtained in the employment application
process and during the consumers' employment. As you point out,
an alternative to this approach would be for a disclosure to be
made, and permission obtained, each time the employer wishes to
obtain a consumer report.
Section 604(b)(2) is a new section added to the FCRA by Congress
in the amendments that went into effect on September 30, 1997.
This provision requires all employers who intend to obtain consumer
reports for employment purposes to first disclose this fact to
consumers in a "document that consists solely of the disclosure"
(Section 604(b)(2)(A)), and to obtain written permission from
the consumers (Section 604(b)(2)(B)). This procedure is designed
to ensure that consumers are aware that consumer reports may be
used for employment purposes.
Section 604(b)(2) does not specifically address the issue of
whether a disclosure must be made, and permission obtained, each
time a consumer report is obtain. However, at each place where
what is now Section 604(b)(2) is discussed in a number of Congressional
committee reports that accompanied proposals to amend Section
604, Congress indicated that employers do not need to go through
the disclosure/authorization process each time a report is requested;
rather, Congress indicated that the employer may obtain a general
or "blanket" authorization from the consumer to obtain
consumer reports at any time during the consumer's tenure of employment.
S. Rep. No. 104-185, 104th Cong., lst Sess. 35 (1995); H.R. Rep.
No. 103-486, 103d Cong., 2d Sess. 30 (1994); S. Rep. No. 103-209,
103d Cong., lst Sess. 11 (1994). For example, in the House committee
report accompanying H.R. 1015, a primary precursor bill to the
final amendments, the committee stated:
Although [this] bill requires that the disclosure and
consent occur before a consumer report is procured, it does
not require that a consumer consent each time his or her report
is procured. Consequently, a person may comply with the requirements
of this section by making the proper disclosure to a consumer
and obtaining the consumer's blanket, written authorization
to obtain his or her consumer report for employment purposes
at any time during the tenure of the consumer's employment.
H.R. Rep. No. 103-486, 103d Cong., 2d Sess. 30 (1994). We believe,
therefore, that a one-time disclosure may be made and permission
obtained from applicants and current employees for the employer
to obtain consumer reports at any time during the application
process or during an employee's tenure.
We note, however, that Section 604(b)(2)(A) requires that any
disclosure be "clear and conspicuous." Accordingly,
whenever an employer intends for a disclosure and authorization
to cover both the application for employment and, if the consumer
is hired, any additional consumer reports obtained while the individual
is an employee, the disclosure should clearly state this fact.
In addition, we note that special procedures must be followed
when investigative consumer reports are obtained. These procedures
are set forth in Section 606.
I hope that this information is helpful to you. Please feel free
to contact me if you have any questions. The opinions expressed
in this letter are advisory in nature and do not necessarily represent
the views of the Commission or of any Commissioner.
Division of Credit Practices