FTC FACTS for Business
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Using Consumer Reports:
What Employers Need To Know
A s an employer, you may use consumer reports when you hire new employees
and when you evaluate employees for promotion, reassignment, and retention
— as long as you comply with the Fair Credit Reporting Act (FCRA). Sections 604, 606,
and 615 of the FCRA spell out your responsibilities when using consumer reports for
employment purposes.
• Your advertisement for cashiers
nets 100 applications. You want
credit reports on each applicant.
You plan to eliminate those with
poor credit histories. What are
your obligations?
• You are considering a number of
your long-term employees for major
promotions. Can you check their
credit reports to ensure that only
financially responsible individuals
are considered?
• A job candidate has authorized you to
obtain a credit report. The applicant has
a poor credit history. Although the credit
history is considered a negative factor, it’s
the applicant’s lack of relevant experience
that’s more important to you. You turn
down the application. What procedures
must you follow?
Facts for Business
The FCRA is designed primarily to protect
the privacy of consumer report information
and to guarantee that the information supplied
by consumer reporting agencies is as accurate
as possible. Amendments to the FCRA
— which went into effect September 30, 1997
— significantly increase the legal obligations of
employers who use consumer reports. Congress
expanded employer responsibilities because of
concern that inaccurate or incomplete consumer
reports could cause applicants to be denied jobs
or cause employees to be denied promotions
unjustly. The amendments ensure (1) that
individuals are aware that consumer reports may
be used for employment purposes and agree to
such use, and (2) that individuals are notified
promptly if information in a consumer report may
result in a negative employment decision.
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