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June 9, 1998

A. Michael Rosen, Esq.
Senior Vice President and General Counsel
Background America Inc.
1900 Church Street, S-400
Nashville, TN 37203

Dear Mr. Rosen:

This is in response to your letter requesting the views of the Commission's staff on issues raised by the amendments to the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681, that went into effect on September 30, 1997. A number of the questions that you pose involve either legal or policy issues that are outside of the Commission staff's authority. The questions that we are able to respond to are summarized in italics below. The staff's views follow.

1. Is a consumer reporting agency prohibited from issuing a consumer report in which reports of convictions for child molestation and rape that are older than seven years are included?

Section 605(a)(5) of the FCRA specifies that no consumer reporting agency (CRA) may make a consumer report containing information about "[r]ecords of arrest, indictment, or conviction of crime which, from the date of disposition, release, or parole, antedate the report by more than seven years." Unfortunately, as presently written, the FCRA does not in most cases permit employers to obtain from a CRA information about a conviction that is more than seven years old. We note, however, that employers may obtain this type of information directly from a non-CRA source, such as the court in which the individual was convicted.

2. How does the requirement that a copy of a consumer report used by an employer be provided to an applicant/employee before an adverse action is taken apply in a situation where the report contains information about a criminal conviction that will automatically disqualify the consumer?

Section 604(b) requires that all employers who use consumer reports provide a copy of the report to the affected consumer before any adverse action is taken. Employers must comply with this provision even where the information contained in the report (such as a criminal record) would automatically disqualify the individual from employment or lead to an adverse employ-ment action. Indeed, this is precisely the situation where it is important that the consumer be informed of the negative information in case the report is inaccurate or incomplete. If the report is in error, the employer may reconsider his or her tentative decision to take adverse action.

3. May an employer provide copies of consumer reports to applicants as soon as the reports are received (i.e., before the employer reviews the report for possible negative information)?

Nothing in the FCRA prohibits this. An employer may choose to send a copy of each consumer report obtained for employment purposes to the affected consumer as soon as it is prepared by the CRA or received by the employer. In this case, the pre-adverse action disclosure required by Section 604(b)(3) need only reference the fact that the report has already been provided to the consumer and include the summary of consumer rights prescribed by the Commission.

4. May a consumer reporting agency fulfill the duties that the FCRA imposes upon its employer clients?

An employer or any other user of consumer report information obtained from a CRA may have the CRA fulfill the user's ministerial obligations under the FCRA. For example, an employer may arrange for the CRA to provide any pre-adverse action disclosures required by Section 604(b). However, the employer or other user remains responsible for any duty imposed by the FCRA and may be subject to liability if the duties are not performed by the CRA.

5. Is a county courthouse that is required to make its records available to the public considered a CRA? Is a CRA that purchases information from such a public record source a reseller in relation to that source?

We believe that a public entity such as a court which is required by law to make its records available for inspection and copying by the public should not be considered a CRA, and that information provided by the courthouse does not constitute a "consumer report." Because a CRA that obtains information from such a source is not "procur[ing] a consumer report" from the courthouse, the provisions of Section 607(e) that concern resellers of consumer reports do not ap-ply. I enclose a copy of a staff opinion letter that discusses these issues in detail (Goeke, 6/9/98).

6. Is it mandatory for a CRA that obtains a consumer report from another CRA to provide to the selling CRA the name of the end-user of a consumer report as required by Section 607(e), even when the selling CRA does not request the information?

Section 607(e) of the FCRA imposes special obligations upon entities that purchase consumer reports for resale from a CRA, including a requirement that the reseller must provide the selling CRA with the identity of the reseller's user. This obligation exists regardless of whether the selling CRA requests the information.

7. Would a CRA/reseller be in compliance with Section 607(e) if it provides as the "name" of the end-user some description of the company (such as "national staffing company") rather than the actual name of the end-user?

The reseller must provide the actual identity of the person or entity that is receiving the report. In the example you have provided, the CRA or reseller must provide the identity of the national staffing company. This is important because it enables a credit bureau or other CRA that is the source of the information to comply with Section 609(a)(3) of the FCRA, which requires CRAs to disclose to consumers the identities (trade name, where applicable) of all recipients of their reports for employment purposes for the previous two years.

8. If a CRA (that is in the business of making investigative consumer reports) is hired by an employer to conduct only a public record search, is it required to comply with the FCRA?

The CRA would have to comply with all relevant provisions of the FCRA. The fact that information is obtained by a CRA from public record sources has no effect upon the status of the information as "consumer report" information once it is obtained and sold by a CRA.

9. Does a CRA need authorization from a consumer in an employment situation if the CRA is hired only to copy public records?

Since the CRA would create a "consumer report" (the results of its inquiry), the information is covered by the FCRA and permission would be needed from the consumer in an employment situation. However, if the employer does not use a CRA but rather goes directly to a courthouse or other public record depository and checks the records, it would not be obtaining a "consumer report" under the FCRA and thus would not have to obtain the employee's permission.

10. Is a CRA permitted to report what it learns when it checks specific statements on a consumer's employment application that refer to events which occurred more than seven years ago (such as a statement that the consumer graduated from college in 1965)?

The CRA may verify the accuracy of application information so long as no provision of Section 605 prohibits this. I am enclosing a copy of a staff opinion letter that discusses this specific issue in greater detail (Seham, 4/17/98). The date that a consumer graduated from college is not an "adverse item of information" covered by Section 605. Accordingly, the CRA is permitted to report this information even if the consumer graduated more than seven years before the CRA reports it.

I hope that this information will be helpful to you. The views that are expressed herein are those of the Commission's staff and do not necessarily reflect the views of the Commission or any individual Commissioner.


William Haynes
Division of Credit Practices