UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON, D.C. 20580
of Credit Practices
Bureau of Consumer Protection
Clarke W. Brinckerhoff
June 12, 1998
Mr. Steven W. Slyter
Corporate Security Department
15407 McGinty Road West
Wayzata, Minnesota 55391
Re: Public records searches
- FCRA §§603(d)(1), 603(f), 604(b)(2), 613
Dear Mr. Slyter:
This responds to your letter asking for
clarification of the application of the Fair Credit Reporting
Act (FCRA) to the background checks the Cargill Security Department
obtains on both applicants for employment, and on current employees
suspected of wrongdoing in the workplace. These checks consist
primarily of a criminal background check provided by a private
investigator or a company that searches court records on Cargill's
behalf. You pose four questions that we repeat verbatim, followed
by our answers.
1. Does Section 613 stand alone
as the requirements for public records (i.e. criminal or civil
court records), or are the requirements under Section 604(b)(2)
required, (i.e. disclosure form signed prior to the search)?
Both provisions apply. Section 613 imposes
obligations on consumer reporting agencies (CRAs, such
as the records search companies you hire) that include public
record infor-mation in the consumer reports they make to clients
for employment purposes. Specifically, CRAs must either (1) notify
the consumer when they provide reports containing public record
information to the employer, or (2) "maintain strict procedures
designed to insure that (adverse) public record information is
complete and up to date" in such reports. Section 604(b)(2)
imposes duties on employers that use consumer reports
(such as Cargill) provided by CRAs. Employers must, before obtaining
any consumer report, (A) disclose to the consumer "in a document
that consists solely of the disclosure" that the report may
be obtained, and (B) procure the consumer's written authorization
to do so.
2. Are private investigators
and court researchers considered a consumer reporting agency if
they are obtaining information directly from the courts and reporting
back to Cargill with the results.
Private investigators and records search
firms that Cargill hires to report on court rec-ords are CRAs
under the definition set forth in Section 603(f); individual researchers
hired by such firms are not. See the enclosed staff opinion letter
(LeBlanc, 6/9/98), where we
discuss the status of such parties in detail.
3. When using a private investigator
or court researcher to conduct a search of criminal or civil court
records on an individual as part of a company internal investigation
(i.e. fraud, theft etc.) is it necessary to obtain authorization
and a signed disclosure from the individual prior to the search?
Yes. If an employer obtains such information
from any CRA (including private investigators or record search
firms, as discussed in item #2 above) as part of an internal investigation,
it is "using consumer reports for employment purposes"
and thus must comply with Section 604(b) that requires the employer
to make a disclosure and obtain a written consent before obtaining
any consumer report. See the enclosed staff opinion letter (Brisch,
6/11/98), where we respond to similar questions.
4. If a company hires a private
investigator or court researcher to perform a criminal or civil
records search and obtains copies of actual court documents, without
generating their own report, is this considered a consumer report
and do the same requirements apply?
Yes. The term "consumer report"
is defined by Section 603(d)(1) of the FCRA to mean any communication
"bearing on a consumer's credit worthiness, credit standing,
credit capacity, character, general reputation, personal characteristics,
or mode of living" by a CRA. (As discussed in item #2 above,
a records search firm or private investigator hired by Cargill
is a CRA.) In forwarding court documents to a client in response
to a request for a criminal or civil records search on a named
individual, the investigator is a CRA communicating information
about some or all of those factors as they relate to that person.
At a minimum, these records bear on an individual's character
and general reputation, and may bear on credit factors as well.
The opinions set forth in this informal
staff letter are not binding on the Commission.
Clarke W. Brinckerhoff