Consumer Financial Protection Bureau Asked to Strengthen Enforcement of FCRA for Criminal Background Checks of Job Applicants

The National Employment Law Project (NELP), National Consumer Law Center (NCLC), and Community Legal Services, Inc. (CLS) recently sent a letter to the Consumer Financial Protection Bureau (CFPB) providing information on a proposed Summary of Rights and regulatory changes to strengthen the protections found in the Fair Credit Reporting Act (FCRA) regarding criminal background checks on job applicants for employment. The letter to the CFPB is available at http://www.nelp.org/page/-/SCLP/2012/NELPrecommendationstoCFPBforFCRAenforcement.pdf?nocdn=1.

According to the March 2012 letter, Consumer Reporting Agencies (CRAs) and employers “regularly violate” the FCRA’s rules regarding criminal background reports. Some of the common problems found on criminal background checks included incorrect, misleading, or inaccurate information contained on criminal background check reports that created a barrier to employment. The letter offered concrete steps for CFPB to take:

  • Finalize the proposed updated ‘Summary of Rights Notice’ for job applicants to more adequately and effectively inform them of their rights under the FCRA as it applies to criminal background checks and create a separate Model Summary of Rights and User Notices for criminal background check reports prepared for employment purposes.
  • Define reasonable procedures to ensure maximum possible accuracy under the FCRA to include: 1) Requiring verification of arrests that lack disposition data for arrests more than one year old; 2) Requiring consumer reporting agencies to use all available data to determine match; 3) Prohibiting name only based matches; 4) Prohibiting multiple reports of same information regardless of source; and 5) Clarifying that non-conviction arrests are obsolete after 7 years, even if the defendant was convicted on concurrent charges.
  • Produce guidelines on matching criteria, especially for consumers with common names, to prohibit CRAs from relying on name-only matches and requiring CRAs to use all available data to determine a match before providing a criminal background check report.
  • Require thirty (30) days between pre-adverse action notice and adverse action from employers to provide the job seeker with an opportunity to dispute inaccuracies on his or her consumer report since the FCRA does not currently provide guidance on the length of time an employer must wait between providing the pre-adverse action notice and taking the adverse action. A 1997 FTC staff opinion letter that notes a five business day waiting period “appears reasonable.”
  • Support private enforcement efforts in FCRA litigation against commercial background screening companies by issuing a nonbinding guidance or policy statement articulating that the FCRA provides for injunctive relief.
  • Require registration of consumer reporting agencies since currently there are no licensing requirements to become a CRA, no system for registration, and the total number of CRAs currently operating is unknown.

The letter concludes: “In our current economic climate, job seekers should not be confronted with unjust barriers to employment. The above recommendations are concrete steps the CFPB can and should take to ensure increased compliance with the FCRA. These regulations will ensure that accurate employers received accurate information and that job applicants are given the information and opportunity they need to secure their rights, reducing unnecessary barriers to employment and getting job seekers back to work.”

In addition to the letter, the National Consumer Law Center (NCLC) issued a report yesterday, ‘Broken Records: How Errors by Criminal Background Checking Companies Harm Workers and Businesses,’ that examined the recommendations in detail. The NCLC report is available in a PDF download at http://www.nclc.org/images/pdf/pr-reports/broken-records-report.pdf.

“An issue that is still being decided in Washington D.C. is what role the CFPB will have in issuing new rules concerning the FCRA, and the relationship between the CFPB and the Federal Trade Commission which has historically regulated and supervised background screening firms,” says Attorney Lester Rosen, founder and CEO of background check firm Employment Screening Resources (ESR). The CFPB was created to protect consumers when it comes to financial products. It was part of the Dodd–Frank Wall Street Reform and Consumer Protection Act (Pub.L. 111-203, H.R. 4173) and was signed into law by President Barack Obama on July 21, 2010. 

Rosen – the author of ‘The Safe Hiring Manual,’ the first comprehensive guide to employment screening – explains that although the CFPB has rule making and enforcement powers when it comes to the FCRA, the CFPB does not have supervisory power over background screening firms since Congress specifically exempted background screening firms from being supervised by the CFPB. 

“This reflects the fact that a background report is not a financial product,” says Rosen. “However, it is unclear what role the CFPB will play in the future.  Background screening firms are still supervised by the FTC, so it remains to be seen if the CFPB will attempt to extend their jurisdiction to backgrounds checks, or not, and the relationship between the two agencies.” 

Rosen says it is important to keep in mind that the screening industry preforms millions of background checks a year. “The big question is whether the problems noted in the letter are anecdotal, or an inherent part of the system. Keep in mind that not all doctors are perfect, but that does not mean we condemn all medical services,” says Rosen. “It is also important to remember all of the harm that is prevented by background checks.  When something bad happens in the workplace, the first question everyone asks is ‘Why was not there not more background checks done?’”
 
From the point of view of background screeners, Rosen says it appears that “errors are few and far between, especially when you take into account the number of background checks performed.” On the other hand, Rosen admits that “for the consumer adversely impacted, it does not matter how many checks were done right if they are the victim of an error.”

The letter also fails, according to Rosen, to differentiate between data brokers that specialize in large databases, and background screeners. “It appears they are lumping everyone into one big group, where in reality, background screening firms do not collect, reuse, or sell bulk data. That is something data brokers do, while a screening firm has an obligation to look at each person individually.”

Rosen also notes that the background screening industry has taken significant steps toward self-regulation. The National Association of Professional Background Screeners (NAPBS®), a non-profit trade association for the screening industry, created the Background Screening Agency Accreditation Program (BSAAP) to stand as the industry “seal” representing a background screening organization’s commitment to excellence, accountability, high professional standards, and continued institutional improvement.

Governed by a strict professional standard composed of requirements and measurements, the NAPBS Background Screening Credentialing Council (BSCC) oversees the BSAAP  application process to ensure background screening organizations seeking accreditation meet or exceed a measurable standard of competence. To become accredited, a CRA must pass a rigorous onsite audit conducted by an independent auditing firm of its policies and procedures as they relate to six critical areas of the BSAAP:

  • Consumer Protection
  • Legal Compliance
  • Client Education
  • Product Standards
  • Service Standards
  • General Business Practices

Employment Screening Resources (ESR) has achieved NAPBS Accreditation by successfully proving compliance with the BSAAP. For more information on background checks, visit ESR – ‘The Background Check Authority’ – at http://www.ESRcheck.com or call 415.898-0044.

Source:
http://www.nelp.org/page/-/SCLP/2012/NELPrecommendationstoCFPBforFCRAenforcement.pdf?nocdn=1.

About Employment Screening Resources (ESR):
Employment Screening Resources (ESR) – ‘The Background Check AuthoritySM – provides accurate and actionable information, empowering employers to make informed safe hiring decisions for the benefit for our clients, their employees, and the public. ESR literally wrote the book on background screening with “The Safe Hiring Manual” by Founder and CEO Lester Rosen. ESR is accredited by The National Association of Professional Background Screeners (NAPBS), a distinction held by a small percentage of screening firms. By choosing an accredited screening firm like ESR, employers know they have selected an agency that meets the highest industry standards. For more information about Employment Screening Resources (ESR), visit http://www.esrcheck.com/ or call 415.898.0044 or 888.999.4474.

About ESR News:
The Employment Screening Resources (ESR) News blog – ESR News – provides employment screening information for employers, recruiters, and jobseekers on a variety of topics including credit reports, criminal records, data privacy, discrimination, E-Verify, jobs reports, legal updates, negligent hiring, workplace violence, and use of search engines and social network sites for background checks. For more information about ESR News or to send comments or questions, please email ESR News Editor Thomas Ahearn at tahearn@esrcheck.com.