Credit Report Red Flag Rules Address Discrepancies Easy as 1,2,3

Questions have been sent in by employers who receive Credit Reports as to what to do with the RED FLAG ADDRESS MISMATCH alerts.  This all came about from new Federal regulations that took effect late last year to curb ID Theft.

The resolution for your company is as Easy as 1, 2, 3.

First, have a written policy in place at your office on how you will deal with this issue.  Specifically the issue is that the address the applicant listed differs from the address that the Credit Bureau has on record.

Second, contact the applicant and ask him/her to send you or show you some documents that indicate the new address.  Any official document will do driver’s license, apartment lease, utility bill, etc.  (The attached sample policy includes the full list of the items that will adequately prove the new address.) Once you review the evidence of the new address and you’re satisfied with it, that’s all you need to do.

Third, if the applicant is concerned that the Credit Bureau doesn’t have the new address, you can give him/her a document that ESR will provide that explains how to make the change with them.

TO RECAP: You will want to create a written policy for your company as soon as you can. You will want to watch your Background Reports to note whether the Credit Report is Red Flagged.  And you will want to take the easy address verification steps with your applicant if there is a different address on the Credit Report and the Background Report. As simple as 1, 2, 3.

A sample policy that ESR has written is available to ESR clients. ESR also provides a link to a page with information an employer can give an applicant if they are concerned about an address mismatch with useful information.

The Federal Trade Commission did announce that it was suspending the rules until August 1, 2009 to provide creditors and financial firms more time to comply.  However, since it is not clear whether the suspension applies to employers, and since this is a best practice to avoid identity theft, ESR suggests that employers begin to implement these rules as soon as possible.