UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON, D.C. 20580
Division of Credit Practices
Helen Goff Foster
September 2, 1998
Mr. David E. Ross
6477 East Bayberry Street
Oak Park, California 91301
Re: Section 604(a)(3) of the Fair Credit Reporting
Dear Mr. Ross:
This is in response to your correspondence concerning our recent
opinion letter (Coffey, 2/11/98) on the Fair Credit Reporting
Act (FCRA). You request that we extend the principles articulated
there, regarding when a car dealer lawfully may request a consumer
report, to the use of consumer reports by prospective employers.
Specifically, you argue that the FCRA should be extended to prohibit
prospective employers from obtaining consumer reports prior to
a conditional offer of employment to the consumer. We conclude
that the FCRA does not provide such a requirement.
Section 604 of the FCRA provides that a consumer reporting agency
may furnish a consumer report only for specified permissible purposes.
In Coffey, we addressed the meaning of Section 604(a)(3)(F),
which states that a consumer report may be provided to a person
"with a legitimate business need for the information"
in connection with "a business transaction initiated by the
consumer." That provision contained two limitations (legitimate
business need by the report user, and transaction initiated by
the consumer) that led us to the conclusion that a car dealer
may lawfully request a consumer report only when it is clear to
both the consumer and the car dealer that the consumer is actually
initiating the purchase or lease of a specific vehicle. In contrast
to that language, the provision that is the topic of your inquiry
-- Section 604(a)(3)(B) -- has no such limitations, but rather
provides a permissible purpose for a person who "intends
to use the information for employment purposes." In light
of this broad statutory language, we believe that Congress did
not intend to limit the permissible use of consumer reports to
only those circumstances where a conditional offer of employment
has been made. Accordingly, we conclude that it is permissible
for a prospective employer to obtain a consumer report on job
applicants prior to making an offer or conditional offer of employment.
Of course, prior to obtaining such report, an employer must comply
with the notice and consent provisions of Section 604(b).
I hope that this information is helpful to you. The views expressed
in this letter are those of the staff and do not necessarily represent
the views of the Commission or of any individual Commissioner.
Helen G. Foster