UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON, D.C. 20580
June 11, 1998
Sidney F. Lewis, Esq.
The Kullman Firm
1000 Energy Center
1100 Poydras Street
New Orleans, Louisiana 70163
Re: Sections 603(d) and 604(b) of the Fair Credit
Dear Mr. Lewis:
This is in response to your letter concerning the application
of the recently amended Fair Credit Reporting Act (FCRA), 15 U.S.C.
§ 1681, to various situations. The questions that you raise are
summarized below. Our views on each issue follow.
1. When an employer contemplates taking
an adverse action based on a consumer report, how long must the
employer wait after providing a copy of the report before taking
the adverse action?
Section 604(b) sets forth specific procedures that must be followed
before an employer takes an adverse action -- such as denying
an application for employment or failing to promote an existing
employee -- which is influenced in any way by a consumer report.
Section 604(b)(3) requires the employer to provide a copy of the
report and a copy of the summary of consumer rights (as prescribed
by the Federal Trade Commission) to the affected consumer "before
taking adverse action" based on the report. The statute does
not specify how long an employer must wait, after providing the
required disclosures, before taking the adverse action. The amount
of time that an employer should wait before taking adverse action
will vary depending upon the circumstances, such as the nature
of the job involved and the way that the employer does business.
Employers may wish to consult with their counsel in order to develop
procedures that are appropriate, keeping in mind the purpose of
the provisions to allow consumers to discuss the report with employers
before adverse action is taken.
2. Are criminal background and driving record
checks performed by a third party on behalf of an employer "consumer
reports" for FCRA purposes?
A report concerning an individual's driving record or criminal
record constitutes informa- tion about the "character, general
reputation, personal characteristics, or mode of living"
of the individual and thus meets the definition of a "consumer
report" under Section 603(d)(1). Ac-cordingly, the answer
to your question is "yes" if the third party performing
the checks qualifies as a "consumer reporting agency"
(CRA) as the term is defined in Section 603(f) of the FCRA.
3. Are criminal records obtained directly
by the employer from a police department or local law enforcement
agency "consumer reports" covered by the FCRA?
When an employer obtains information that is available to the
public from a local law enforcement agency or police department,
the employer's actions are not covered by the FCRA. We do not
believe that courts and law enforcement entities that are required
to make records available to the public are CRAs, or that the
information they provide to the public are "con-sumer reports"
under the applicable definitions set forth in the FCRA. Attached
is a staff opinion letter (Goeke,
6/9/98) that discusses this issue in more detail.
4. When a consultant coordinates drug testing
and reports the results of the tests to the employer, is the consultant
a "consumer reporting agency" for FCRA purposes and
are the results of the drug test a "consumer report"?
We would need to review all the consultant's procedures to provide
a reasoned opinion. If a consultant or other intermediary does
nothing more than perform mechanical functions such as arranging
for a laboratory to conduct a drug test, collecting samples, forwarding
them to the laboratory, and transmitting the test results to the
employer, it probably will not be a CRA making a consumer report.
Attached is a staff opinion letter that discusses this issue in
some detail (Islinger, 6/9/98).
I hope that this information is helpful to you. The views that
are expressed above are those of the Commission's staff and are
not the views of the Commission itself or any particular Commissioner.
Division of Credit Practices