We recently published our latest privacy digest, which features the latest news and developments on topics ranging from background checks to privacy, credit reporting, and more.
Looking back on privacy issues that arose throughout the month of August, here are two key highlights with commentary from the team at ClearStar.
FTC, Credit Reports, and Disputing Information That Can’t be Confirmed
On August 3rd, the Federal Trade Commission (FTC) published a blog post entitled, “How to Dispute Credit Report Information That Can’t Be Confirmed.” In the post, the FTC focuses on what consumers can do when a debt collector reported a debt to a credit reporting agency and then went out of business.
The post cites an FTC enforcement action against Crown Funding Company (Crown), a debt collection company the FTC sued for deceptive practices, which resulted in the company shutting down its business. According to the FTC, “[f]ederal law says that, when consumers dispute information on a credit report, the credit reporting agencies must investigate it. If the credit reporting agency can’t confirm the information with the company that reported the debt—and in the case of Crown, it can’t—it must delete the information from the consumer’s credit report, usually within 30 days of receiving the consumer’s dispute.”
The blog includes a list of clear steps consumers can take in contacting a credit reporting agency to correct their credit report, as well as a sample letter to assist consumers disputing items in their credit report. Read the FTC blog post.
These same duties apply to all consumer reporting agencies with regard to any information reported in consumer reports, including criminal background checks, employment history, education verification, etc. for employment and residential screening.
If the completeness or accuracy of any information contained in a consumer’s file at a Consumer Reporting Agency (CRA) is disputed by the consumer and the consumer notifies the CRA directly, or indirectly through a reseller, of the dispute, the CRA is required to conduct a reasonable reinvestigation, free of charge. In this process, the CRA must determine whether the disputed information is incomprehensive and record the current status of the disputed information, or delete the item from the file before the end of the 30-day period when the CRA receives the notice of the dispute from the consumer or reseller.
Additionally, a CRA must provide written notice to the consumer of the results of the reinvestigation no later than 5 business days after the completion of the reinvestigation. If the reinvestigation does not resolve the dispute, the consumer may file a brief statement describing the nature of the dispute to be appended next to the disputed information and it must be included in future reports unless there are reasonable grounds to believe that the information is frivolous or irrelevant.
If the disputed information came from a report obtained from another CRA, the duties and responsibilities of the reseller is to determine, free of charge and within 5 business days of receiving the notice, whether the item of information is incomplete or incomprehensive as a result of an act or omission of the reseller. If the reseller determines the information is incomplete or incomprehensive as a result of an act or omission of the reseller, they must correct or delete the information within 20 days. If not incomplete or incomprehensive, the reseller must provide all relevant information to each CRA. It is the responsibility of the originating CRA to notify the consumer of the result of the reinvestigation through the reseller.
We encourage consumers to frequently monitor their credit reports for inaccuracies and take advantage of the free annual credit reports to which they are entitled.
FCRA and Consumer Credit Checks
On August 5th, Senator Elizabeth Warren (D-MA) introduced S. 1981, the Equal Employment for All Act of 2015. The bill would “amend the Fair Credit Reporting Act (FCRA) to prohibit the use of consumer credit checks against prospective and current employees for the purposes of making adverse employment decisions.”
Under the bill, “a person, including a prospective employer or current employer, may not use a consumer report or investigative consumer report, or cause a consumer report or investigative consumer report to be procured, with respect to any consumer where any information contained in the report bears on creditworthiness, credit standing, or credit capacity of the consumer: For employment purposes; or For making an adverse action.”
The bill highlights two exceptions where an employer may use a consumer report which includes credit information: When the consumer applies for, or currently holds, employment that requires national security clearance; or When otherwise required by law.
Read the Bill (PDF)
The proposed federal bill, if enacted, would apply across the nation and is somehow more restrictive than the statutes enacted by some states limiting to the right to request and/or use credit report information for employment making decisions purposes, considering there are only two exceptions for which it can be requested and used under the federal bill. First, when the consumer applies for or currently holds employment that requires national security clearance; or, secondly, when otherwise required by law.
Since 2007, laws restricting the use of credit screening in employment decisions have become common across the country. The total number of states that limit employers’ use of credit information in making employment decisions is now 10: California, Colorado, Connecticut, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont, and Washington. Washington was first to enact legislation in 2007, with Colorado and Nevada being the most recent to enact legislation in 2013. The remaining states allow for the use of credit information in employment decisions. See a comprehensive list of the states that enacted statutes with the exception.
This development is a change of course for this administration as it was previously discussed that the Equal Opportunity Employment Commision (EEOC) would release an Enforcement Guidance on the use of credit report information for employment screening purposes prior to coming out with an Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. §2000e et seq. on April 25, 2012. To date the EEOC has not released an Enforcement Guidance on the use of credit report information for employment screening purposes and this administration appears to have instead opted for a legislative path.
Get the Full Privacy Digest
Want to read more stories like these that cover the hottest topics in background checks and policy updates? See our full August Privacy Digest and watch our social media outlets including Twitter, LinkedIn, and Facebook for future updates.