UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON, D.C. 20580
June 9, 1998
A. Michael Rosen, Esq.
Senior Vice President and General Counsel
Background America Inc.
1900 Church Street, S-400
Nashville, TN 37203
- Re: Section 604(b), Section 605, and Section 607 of the Fair
Credit Reporting Act
Dear Mr. Rosen:
This is in response to your letter requesting the views of the
Commission's staff on issues raised by the amendments to the Fair
Credit Reporting Act (FCRA), 15 U.S.C. § 1681, that went
into effect on September 30, 1997. A number of the questions that
you pose involve either legal or policy issues that are outside
of the Commission staff's authority. The questions that we are
able to respond to are summarized in italics below. The staff's
1. Is a consumer reporting agency prohibited from issuing
a consumer report in which reports of convictions for child molestation
and rape that are older than seven years are included?
Section 605(a)(5) of the FCRA specifies that no consumer reporting
agency (CRA) may make a consumer report containing information
about "[r]ecords of arrest, indictment, or conviction of
crime which, from the date of disposition, release, or parole,
antedate the report by more than seven years." Unfortunately,
as presently written, the FCRA does not in most cases permit employers
to obtain from a CRA information about a conviction that is more
than seven years old. We note, however, that employers may obtain
this type of information directly from a non-CRA source, such
as the court in which the individual was convicted.
2. How does the requirement that a copy of a consumer
report used by an employer be provided to an applicant/employee
before an adverse action is taken apply in a situation where the
report contains information about a criminal conviction that will
automatically disqualify the consumer?
Section 604(b) requires that all employers who use consumer reports
provide a copy of the report to the affected consumer before any
adverse action is taken. Employers must comply with this provision
even where the information contained in the report (such as a
criminal record) would automatically disqualify the individual
from employment or lead to an adverse employ-ment action. Indeed,
this is precisely the situation where it is important that the
consumer be informed of the negative information in case the report
is inaccurate or incomplete. If the report is in error, the employer
may reconsider his or her tentative decision to take adverse action.
3. May an employer provide copies of consumer reports
to applicants as soon as the reports are received (i.e., before
the employer reviews the report for possible negative information)?
Nothing in the FCRA prohibits this. An employer may choose to
send a copy of each consumer report obtained for employment purposes
to the affected consumer as soon as it is prepared by the CRA
or received by the employer. In this case, the pre-adverse action
disclosure required by Section 604(b)(3) need only reference the
fact that the report has already been provided to the consumer
and include the summary of consumer rights prescribed by the Commission.
4. May a consumer reporting agency fulfill the duties
that the FCRA imposes upon its employer clients?
An employer or any other user of consumer report information
obtained from a CRA may have the CRA fulfill the user's ministerial
obligations under the FCRA. For example, an employer may arrange
for the CRA to provide any pre-adverse action disclosures required
by Section 604(b). However, the employer or other user remains
responsible for any duty imposed by the FCRA and may be subject
to liability if the duties are not performed by the CRA.
5. Is a county courthouse that is required to make
its records available to the public considered a CRA? Is a CRA
that purchases information from such a public record source a
reseller in relation to that source?
We believe that a public entity such as a court which is required
by law to make its records available for inspection and copying
by the public should not be considered a CRA, and that information
provided by the courthouse does not constitute a "consumer
report." Because a CRA that obtains information from such
a source is not "procur[ing] a consumer report" from
the courthouse, the provisions of Section 607(e) that concern
resellers of consumer reports do not ap-ply. I enclose a copy
of a staff opinion letter that discusses these issues in detail
6. Is it mandatory for a CRA that obtains a consumer
report from another CRA to provide to the selling CRA the name
of the end-user of a consumer report as required by Section 607(e),
even when the selling CRA does not request the information?
Section 607(e) of the FCRA imposes special obligations upon entities
that purchase consumer reports for resale from a CRA, including
a requirement that the reseller must provide the selling CRA with
the identity of the reseller's user. This obligation exists regardless
of whether the selling CRA requests the information.
7. Would a CRA/reseller be in compliance with Section 607(e)
if it provides as the "name" of the end-user some description
of the company (such as "national staffing company")
rather than the actual name of the end-user?
The reseller must provide the actual identity of the person or
entity that is receiving the report. In the example you have provided,
the CRA or reseller must provide the identity of the national
staffing company. This is important because it enables a credit
bureau or other CRA that is the source of the information to comply
with Section 609(a)(3) of the FCRA, which requires CRAs to disclose
to consumers the identities (trade name, where applicable) of
all recipients of their reports for employment purposes for the
previous two years.
8. If a CRA (that is in the business of making investigative
consumer reports) is hired by an employer to conduct only a public
record search, is it required to comply with the FCRA?
The CRA would have to comply with all relevant provisions of
the FCRA. The fact that information is obtained by a CRA from
public record sources has no effect upon the status of the information
as "consumer report" information once it is obtained
and sold by a CRA.
9. Does a CRA need authorization from a consumer
in an employment situation if the CRA is hired only to copy public
Since the CRA would create a "consumer report" (the
results of its inquiry), the information is covered by the FCRA
and permission would be needed from the consumer in an employment
situation. However, if the employer does not use a CRA but rather
goes directly to a courthouse or other public record depository
and checks the records, it would not be obtaining a "consumer
report" under the FCRA and thus would not have to obtain
the employee's permission.
10. Is a CRA permitted to report what it learns
when it checks specific statements on a consumer's employment
application that refer to events which occurred more than seven
years ago (such as a statement that the consumer graduated from
college in 1965)?
The CRA may verify the accuracy of application information so
long as no provision of Section 605 prohibits this. I am enclosing
a copy of a staff opinion letter that discusses this specific
issue in greater detail (Seham,
4/17/98). The date that a consumer graduated from college is not
an "adverse item of information" covered by Section
605. Accordingly, the CRA is permitted to report this information
even if the consumer graduated more than seven years before the
CRA reports it.
I hope that this information will be helpful to you. The views
that are expressed herein are those of the Commission's staff
and do not necessarily reflect the views of the Commission or
any individual Commissioner.
Division of Credit Practices