Legal Compliance Essential for Background Screening Companies Accredited by the NAPBS

Gavel and Scales

Written By ESR News Editor Thomas Ahearn

Being well versed in the federal Fair Credit Reporting Act (FCRA) and numerous state and local laws for background checks to ensure employers remain in legal compliance is essential for background screening companies accredited by the National Association of Professional Background Screeners (NAPBS).

The NAPBS, a non-profit trade association representing the background screening industry founded in 2003, offers Consumer Reporting Agencies (CRAs) – the official name for background screening companies – a way to be accredited through its Background Screening Agency Accreditation Program (BSAAP).

CRAs accredited by the BSAAP are committed to uphold and deliver the highest level of industry standards for six critical areas that include “Information Security,” “Legal and Compliance,” “Client Education,” “Researcher and Data Standards,” “Verification Services Standards,” and “Business Practices.”

“Legal and Compliance” is the second of six areas covered by the BSAAP standard – which was updated in 2018 – and includes 21 clauses that CRAs must follow in order to become accredited by the NAPBS. There are 68 clauses in the entire BSAAP standard. Here are the clauses for “Legal and Compliance”:

  • 2.1 Compliance with Law and Regulation – The CRA must comply with all provisions of all applicable law and regulation pertaining to the consumer reports provided by the CRA for employment purposes. This includes, but is not limited to, the Federal FCRA and all legal and regulatory requirements identified in this Accreditation Standard.
  • 2.2 Federal Consumer Reporting Law – The CRA must designate an individual(s) or position(s) within the organization responsible for CRA’s compliance with all sections of the federal FCRA that pertain to the consumer reports provided by the CRA for employment purposes.
  • 2.3 State Consumer Reporting Law – The CRA must designate an individual(s) or position(s) within the organization responsible for compliance with all state consumer reporting laws that pertain to the consumer reports provided by the CRA for employment purposes.
  • 2.4 Driver Privacy Protection Act (DPPA) – The CRA must designate an individual(s) or position(s) within the organization responsible for compliance with the DPPA that pertain to the consumer reports provided by the CRA for employment purposes, if the CRA furnishes consumer reports that contain information subject to the DPPA.
  • 2.5 State Implemented DPPA Compliance – The CRA must designate an individual(s) or position(s) within the organization responsible for compliance with state implementations of the DPPA that pertain to the consumer reports provided by the CRA for employment purposes, if the CRA furnishes consumer reports that contain information subject to state implementations of the DPPA.
  • 2.6 Integrity – CRA must have and follow a policy of not engaging in bribery or any other fraudulent activity to obtain preferential treatment from a public official or government entity.
  • 2.7 Prescribed Notices – CRA must have and follow a procedure to provide client current version of all currently required federal notices required by the FCRA, such as those prescribed by the CFPB.
  • 2.8 Agreement from Client – Before providing consumer reports to clients, CRA must have and follow a procedure to obtain a signed agreement, certification, affirmation or other signed document from client (referred to as “user” in federal FCRA) in which client agrees to meet the requirements of all applicable law and regulation, specifically including but not limited to the federal FCRA.
  • 2.9 Client Legal Responsibilities – CRA must have and follow procedures to inform client that client has legal responsibilities when procuring and using consumer reports for employment purposes. CRA must recommend to client that client work with legal counsel to ensure compliance with their specific legal responsibilities.
  • 2.10 Client Required Documents – CRA must have and follow procedures to inform client of specific forms or documents required to complete specific searches.
  • 2.11 Disclosure and Authorization – CRA must have and follow a procedure to inform client of legal requirements imposed by the federal FCRA and, in some instances, state consumer reporting laws, regarding disclosing to and obtaining authorization from consumers prior to requesting a consumer report from CRA. CRA must recommend to client that client consult with counsel to develop a legally compliant disclosure and authorization process.
  • 2.12 Adverse Action – CRA must have and follow a procedure to inform client of legal requirements imposed by the federal FCRA and, in some instances, state consumer reporting laws, regarding taking adverse action against a consumer based on a consumer report. CRA must recommend to client that client consult with counsel to develop a legally compliant adverse action process.
  • 2.13 Consumer Disputes – CRA must have and follow procedures for handling and documenting a consumer dispute. At a minimum, procedures must meet all applicable legal and regulatory requirements.
  • 2.14 Database Criminal Records – When reporting public record information which is likely to have an adverse effect on a consumer’s ability to obtain employment, pursuant to the federal FCRA the CRA shall either: A) maintain strict procedures designed to insure the reported information is complete and up to date; or B) at the time such public record information is reported to the user of such consumer report, notify the consumer of the fact that public record information is being reported by the CRA, together with the name and address of the person to whom such information is being reported.
  • 2.15 Identification Confirmation – CRA must have and follow procedures requiring reasonable procedures to assure maximum possible accuracy when determining the identity of a consumer who is the subject of a record prior to reporting the information.
  • 2.16 Full File Disclosure – CRA must have and follow procedures for documenting and responding to a consumer request for all information in consumer’s file.
  • 2.17 Jurisdictional Knowledge – The CRA must employ or have access to a qualified individual(s) within the organization or through a designated service provider, who is responsible for understanding court terminology, as well as understanding the various jurisdictional court differences if CRA reports court records.
  • 2.18 Automated Reporting Systems – If CRA uses automated reporting systems, CRA must have and follow reasonable procedures to ensure results as reported on consumer report accurately reflect source information received into the automated reporting system.
  • 2.19 Quality – CRA must have and follow procedures to reasonably ensure the accuracy and quality of all work product. CRA must have and follow accuracy and quality procedures specific to work product containing public records likely to have an adverse effect on consumer. The CRA must take into account the particular nature of public records research and reporting when designing and implementing the specific procedures related to accuracy, completeness, and currency of public records research and reporting likely to have an adverse effect on consumers. CRA must designate an individual(s) or position(s) within the organization responsible for quality.
  • 2.20 Reappearance of Inaccurate Information – CRA must have and follow procedures to prevent reappearance of inaccurate consumer information in consumer reports.
  • 2.21 Quality Analysis – CRA must have and follow procedures to audit and analyze product quality. Identified quality lapses, including those identified during consumer disputes, must be quantified and analyzed, including root cause analysis, and appropriate corrective actions must be implemented.

To become accredited by the NAPBS, CRAs must demonstrate initial and ongoing compliance with the accreditation standard as prepared by the Background Screening Credentialing Council (BSCC). Compliance is demonstrated through rigorous audits completed by an independent third-party auditor.

CRAs must document each of their policies and processes as required in each of the areas within the standard and demonstrate visible compliance with their policies to the auditor. Accreditation lasts for a period of five years, after which time firms are required to recomplete the process to remain accredited.

Founded as a non-profit trade association in 2003, the NAPBS currently represents more than 880 members engaged in background screening across the United States. NAPBS member companies range from Fortune 100 firms to small local businesses. To learn more about the NAPBS, visit www.napbs.com.

In May of 2019, the NAPBS selected Dawn Standerwick, Vice President of Strategic Growth at Employment Screening Resources® (ESR), as the “NAPBS Volunteer of the Month.” Standerwick currently serves as Chair of the Ethics Committee and is active with the Finance and Government Relations Committees.

In October of 2018, Standerwick was recognized as longest serving Board Member in the history of the NAPBS with nine years of service that included four years as a Regular Director and five years serving on the Executive Committee as Secretary, Treasurer, Chair Elect, Chair, and Immediate Past Chair.

Employment Screening Resources® (ESR) is a “Founding Member” of the NAPBS and is accredited under the BSAAP. ESR Founder and CEO Attorney Lester Rosen was the Chairperson of the steering committee that founded the NAPBS and served as first co-Chair. To learn more about ESR, visit www.esrcheck.com.

NOTE: Employment Screening Resources® (ESR) does not provide or offer legal services or legal advice of any kind or nature. Any information on this website is for educational purposes only.

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