Advisory Opinion to Goeke (06-09-98)

Division of Credit Practices

Clarke W. Brinckerhoff

Attorney

202-326-3224

June 9, 1998

Ms. Gail Goeke
LATHROP & GAGE
2345 Grand Boulevard
Kansas City, MO 64108

Re: Criminal records checks -- FCRA §§603(d), 603(f), 607(e)

Dear Ms. Goeke:

This responds to your letter concerning the application of the amended Fair Credit Re-porting Act ("FCRA") to criminal records checks done for employ-ment purposes. You report that state law requires certain employers (including members of the hospital association you represent) to request criminal records checks on employees within two working days of their hiring. Employers comply by obtaining from the Highway Patrol for $5.00 a list of convic-tions, which you have told us is public data available for that fee to anyone. Your questions and the response of the Commission staff are set forth below.

1. When a hospital employer, in compliance with state law, requests a criminal records check from the State Highway Patrol, must the employer comply with the FCRA?

No. In our view, a state agency that is providing information that is generally available to the public should not be considered a "consumer reporting agency" (CRA) under the FCRA, and the communication of that data by such an agency to an employer or other party should not be considered a "consumer report." While it is possible to interpret the very broad terminology in the definitions of those two terms set forth in Sections 603(d) and 603(f) to cover such public record sources,(1) some FCRA provisions cannot be sensibly applied to them. Most significantly, such public agencies could provide data only to parties who need it for a "permissible purpose" as defined in Section 604 of the FCRA,(2) which would be entirely con-trary to their basic mission as a source of public record information.(3) Therefore, if treated as CRAs, they would be forced to refuse access to parties who seek criminal records information for such common and useful purposes as research and journalistic endeavors, or for aid in law enforcement.

2. Is the Highway Patrol required to limit the information to seven years?

No. This question highlights one of the reasons it is inadvisable to consider public rec-ord offices to be CRAs. Section 605 of the FCRA prohibits consumer reporting agencies from reporting adverse information to employers if it is more than seven years old. If criminal rec-ords sources were considered to be CRAs, they would thus be forbidden by Section 605 from telling any employer about an applicant's 7½-year-old felony conviction. There is nothing in the legislative history to indicate that Congress intended to require the Highway Patrol to with-hold important publicly available conviction information, even if it is over seven years old.

3. If the hospital association sets up a company to serve as a conduit to funnel criminal records requests from employer hospitals to the Highway Patrol, and the reports from the Patrol to the hospitals for a slight fee, does the company become a reseller under the FCRA?

No. Section 607(e), the provision that imposes duties on resellers, applies only to those who "procure a consumer report for purposes of reselling the report . . ." (emphasis added). Because the Highway Patrol would not be making a "consumer report" to the conduit, it is our view that the conduit would not be a reseller subject to this provision if its function was only to "funnel criminal records requests from employer hospitals to the Highway Patrol" as you indicate.(4)

Section 607(e)(1) requires a reseller to disclose to a CRA both the identity of the end-user of the report and each permissible purpose. Neither of these disclosures can be sensibly applied to a party consulting a public source that makes information available to all comers, such as the five-dollar Highway Patrol report discussed in your letter. The Highway Patrol must sell the information to anyone; it thus has no reason to know the identity,(5) or purpose, of the end-user of the report.

The opinions set forth in this informal staff letter are not binding on the Commission.

Sincerely yours,

Clarke W. Brinckerhoff

1. Section 603(d)(1) states:

The term "consumer report" means any written, oral, or other communication of any information by a consumer reporting agency bearing on a consumer's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living which is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in estab-lishing the consumer's eligibility for (A) credit or insurance to be used primari-ly for personal, family, or household purposes; (B) employment purposes; or (C) any other purpose authorized under section 604.

Section 603(f) states:

The term "consumer reporting agency" means any person which, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties, and which uses any means or facility of interstate commerce for the purpose of preparing or furnishing consumer reports.

2. Section 604 is designed to protect consumers' privacy interest in the files of credit bu-reaus and other consumer reporting agencies by limiting access to that data to parties who have one of the enumerated "permissible purposes" for the information. The most common purpose is afforded to a business (creditor, employer, insurer, landlord) to evaluate a consumer's application. The other listed purposes are the order of a court, written authorization of the con-sumer, review of an employee or credit account holder, and review by certain governmental authorities in order to establish or enforce a child support obligation.

3. Similarly, if public sources such as the Highway Patrol were CRAs, Section 609(a)(3) would require them to develop the capacity to tell every individual how many parties had checked his or her criminal history within the last 1-2 years. See footnote 5, below.

4. Although the conduit would not be a reseller subject to Section 607(e), it would probably be a "consumer reporting agency" as defined in Section 603(f), quoted in footnote 1 above, and thus subject to other FCRA provisions applicable to CRAs. The enclosed opinion letters (LeBlanc, 6/9/98; Islinger, 6/9/98) discusses that issue in some detail.

5. Contrariwise, the identity of the end user is critical to allow a credit bureau to comply with its duty to disclose to consumers the identities of recipients of their credit history under Section 609(a)(3). This information enables consumers to know if some party obtained their credit history improperly.