HumenhukCIPP/US Study Guide
Chapter 12: Workplace Privacy

FCRA Restrictions on Background Checks

Reviewed by Victor Humenhuk. Published . Reviewed .

The FCRA governs background checks via consumer reports from a CRA - not just credit, but criminal and driving records too. Employers need a permissible purpose (employment) and must give written notice, get written consent, certify to the CRA, and provide pre-adverse-action and adverse-action notices.

How this supports CIPP/US study

Use this lesson to identify the disclosure, workplace or cross-border rule that changes the result in a fact pattern. Continue with the CIPP/US study plan.

The FCRA covers any background check obtained from a Consumer reporting agency (CRA)|CRA, including criminal or driving records, not just credit. A permissible purpose is required; employment purposes include preemployment screening and decisions about promotion, reassignment, or retention.

  • Provide written notice that a consumer report will be obtained for employment purposes (and indicate if an investigative consumer report will be obtained)
  • Obtain written consent from the applicant
  • Obtain data only from a qualified CRA
  • Certify to the CRA that the employer has a permissible purpose and obtained consent
  • Before adverse action, provide a pre-adverse-action notice with a copy of the report so the applicant can dispute it
  • After adverse action, provide an adverse-action notice
Penalties and nontraditional CRAs

Noncompliance can bring civil and criminal penalties and a private right of action. The FTC has aggressively pursued nontraditional CRAs that collect data online and report it to employers.

Key terms - quick answers

What is “Consumer reporting agency (CRA)”?
An organization that regularly assembles or evaluates consumer information to furnish consumer reports to third parties for a fee.
What is “Consumer report”?
Under FCRA, written/oral/other communications bearing on a consumer's creditworthiness, character, reputation, personal characteristics, or mode of living.
What is “Investigative consumer report”?
A consumer report where some information is gathered through interviews with neighbors, friends, associates, or acquaintances (e.g., reference checks).
What is “Permissible purpose”?
An FCRA requirement that a consumer report be obtained only for an allowed reason; 'employment purposes' include preemployment screening and promotion/reassignment/retention decisions.

Sources and study method

This independent lesson uses active recall, spaced retrieval and scenario practice. Read the full study method.