Skip to main content

August 5, 1998

Frank S. James III, Esq.
SouthTrust Tower
420 N. 20th St., Suite 1600
Birmingham, Alabama 35203-5202

Re: Section 604(b)(2) of the Fair Credit Reporting Act

Dear Mr. James:

This is in response to your letter requesting a staff interpretation of Section 604(b)(2) of the Fair Credit Reporting (FCRA). This section requires employers to disclose to employees and applicants for employment the fact that consumer reports may be procured and to obtain written permission before any consumer report is obtained. You ask whether it is permissible under Section 604(b)(2) for an employer to make a one-time disclosure to applicants and current employees and to obtain written permission at that time covering any consumer report obtained in the employment application process and during the consumers' employment. As you point out, an alternative to this approach would be for a disclosure to be made, and permission obtained, each time the employer wishes to obtain a consumer report.

Section 604(b)(2) is a new section added to the FCRA by Congress in the amendments that went into effect on September 30, 1997. This provision requires all employers who intend to obtain consumer reports for employment purposes to first disclose this fact to consumers in a "document that consists solely of the disclosure" (Section 604(b)(2)(A)), and to obtain written permission from the consumers (Section 604(b)(2)(B)). This procedure is designed to ensure that consumers are aware that consumer reports may be used for employment purposes.

Section 604(b)(2) does not specifically address the issue of whether a disclosure must be made, and permission obtained, each time a consumer report is obtain. However, at each place where what is now Section 604(b)(2) is discussed in a number of Congressional committee reports that accompanied proposals to amend Section 604, Congress indicated that employers do not need to go through the disclosure/authorization process each time a report is requested; rather, Congress indicated that the employer may obtain a general or "blanket" authorization from the consumer to obtain consumer reports at any time during the consumer's tenure of employment. S. Rep. No. 104-185, 104th Cong., lst Sess. 35 (1995); H.R. Rep. No. 103-486, 103d Cong., 2d Sess. 30 (1994); S. Rep. No. 103-209, 103d Cong., lst Sess. 11 (1994). For example, in the House committee report accompanying H.R. 1015, a primary precursor bill to the final amendments, the committee stated:

Although [this] bill requires that the disclosure and consent occur before a consumer report is procured, it does not require that a consumer consent each time his or her report is procured. Consequently, a person may comply with the requirements of this section by making the proper disclosure to a consumer and obtaining the consumer's blanket, written authorization to obtain his or her consumer report for employment purposes at any time during the tenure of the consumer's employment.

H.R. Rep. No. 103-486, 103d Cong., 2d Sess. 30 (1994). We believe, therefore, that a one-time disclosure may be made and permission obtained from applicants and current employees for the employer to obtain consumer reports at any time during the application process or during an employee's tenure.

We note, however, that Section 604(b)(2)(A) requires that any disclosure be "clear and conspicuous." Accordingly, whenever an employer intends for a disclosure and authorization to cover both the application for employment and, if the consumer is hired, any additional consumer reports obtained while the individual is an employee, the disclosure should clearly state this fact. In addition, we note that special procedures must be followed when investigative consumer reports are obtained. These procedures are set forth in Section 606.

I hope that this information is helpful to you. Please feel free to contact me if you have any questions. The opinions expressed in this letter are advisory in nature and do not necessarily represent the views of the Commission or of any Commissioner.


William Haynes
Division of Credit Practices