Advisory Opinion to Halpern (06-11-98)

June 11, 1998

Matthew B. Halpern, Esq.
Jackson, Lewis, Schnitzler & Krupman
1000 Woodbury Road
Suite 402
Woodbury, New York 11797

Re: Sections 603(d) and 605 of the Fair Credit Reporting Act

Dear Mr. Halpern:

This is in response to your letters of December 8, 1997, and December 15, 1997, request-ing the views of the Commission's staff on the following questions involving the application of the Fair Credit Reporting Act ("FCRA") to the activities of your clients:

1. If an employer obtains only driving records and criminal records information about potential employees from a third party, is the information covered by the FCRA?

Yes. Section 603(d)(1) of the FCRA defines "consumer report" to mean any oral, written or other communication by a consumer reporting agency (CRA)(1) bearing on a consumer's "credit worthiness, credit standing, credit capacity, character, general reputation, personal characteris-tics, or mode of living" which is used, expected to be used, or collected in whole or in part for the purpose of serving as a factor in establishing a consumer's eligibility for, inter alia, credit, insurance, or employment. To be a consumer report, information in the report need relate to only one of the characteristics enumerated above. Since driving records and criminal records do con-tain information about a consumer's character, general reputation, personal characteristics, or mode of living, these types of information are covered by the definition of "consumer report." I have enclosed another staff opinion letter (Poquette, 6/10/98) that discusses this point.

When an employer obtains information from a CRA about the driving record or the crim-inal record of an individual, the employer is a "user" of information covered by the FCRA and must comply with all provisions of the FCRA that apply to users of information obtained from CRAs. The most significant of these provisions are Sections 604(b) and 615(a), which require users of information for employment purposes to make various disclosures when adverse actions are contemplated and taken based upon consumer reports.

2. A bank subject to regulation under the Financial Reform Recovery and Enforcement Act (FIRREA) of 1989 is prohibited from hiring individuals who have, at any time in their life, been convicted of certain crimes. May a consumer reporting agency provide to a client who is a bank information about criminal records that predates the report by more than seven years so that the bank may comply with FIRREA?

Section 605 of the FCRA limits the information that may be reported by a CRA. In particular, Section 605(a)(5) prohibits a CRA from reporting records of arrest, indictment, or conviction that, from the date of disposition, release, or parole, antedate the report by more than seven years. Unfortunately, there is no exception in the FCRA that would permit a CRA to report criminal records beyond seven years in the situation you raise where federal law requires a bank to check criminal records beyond seven years. However, we note that a bank or other entity that checks records on its own is not covered by the FCRA, and therefore may conduct searches without regard to the FCRA's time limits.

I hope that this information is helpful to you. The views that are expressed in this letter are the views of the Commission's staff and do not necessarily represent the views of the Commission or of any individual Commissioner.

Sincerely,

William Haynes
Attorney
Division of Credit Practices

1. It appears clear that the commercial service you describe would be a "consumer report-ing agency" (i.e., the service regularly assembles or evaluates "consumer report" information for sale to third parties).