Retailers Struggle With Consumer Report Compliance

Posted Friday, May 15th, 2015 by Sterling Talent Solutions

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Retailers Struggle With Consumer Report Compliance | SterlingBackcheck

Recent class action lawsuits have targeted U.S. retailers for not complying with the Fair Credit Reporting Act (FCRA) and other state laws concerning disclosure and consent practices for conducting background checks.

Under the FCRA, employers have specific responsibilities relating to the use of background checks (referred to as “consumer reports”). One of these responsibilities includes providing the candidate with clear disclosure and authorization forms in a standalone document. This means that the disclosure cannot be combined with any other policies, legal language, or information. If any extraneous information is found, the process will be considered in violation of the FCRA.

Online job applications have caused problems for some retailers because they have included the disclosure in a scrolling text box along with other information. Although online disclosure and authorization is perfectly acceptable, it must still comply with the requirement to be clear, conspicuous, and separate from all other forms or information.

Consumer report compliance is extremely important for all employers. 2014 was one of the most litigious years that the background screening industry has seen. Ban-the-box laws were adopted across several states and municipalities, the EEOC issued guidance on background checks, and many class action lawsuits were filed against employers for their failure to comply with legislation.

To prevent your organization from class action lawsuits and violating terms of the FCRA and any other relevant employment laws, you should seek advice from legal counsel. In a recent survey conducted by SterlingBackcheck, a shocking 11% of employers indicated that they do not use any resources such as in-house counsel, external lawyers, screening providers, or trade associations to maintain compliance with applicable legislation.

In addition to legal counsel, third-party providers offer helpful compliance tips and services. Here are four ways that your background screening company can help get you on the path to compliance.

  1. Pre-Adverse & Adverse Action Notices
    Many third-party screening providers can help manage your pre-adverse and adverse action notices. The FCRA requires that these notices are sent when information contained in a consumer report may result in a negative outcome such as precluding an individual from employment or promotion.

  2. Compliance News & Updates
    Keep an eye out for complimentary compliance updates offered by third-party providers. SterlingBackcheck provides news on compliance-related topics and legislative updates through its website. You can also have compliance news conveniently delivered to your inbox by signing up for the Screening Insider Newsletter.

  3. Complimentary Webinars
    Webinars are a great way to remain up-to-speed on background checking compliance. Several screening providers offer free webinars regardless of whether or not you are a client. Register for SterlingBackcheck’s next quarterly FCRA Compliance webinar here: FCRA Compliance: Quarterly Update

  4. In-House Compliance Team
    Your background check provider should have an in-house compliance team to help answer any questions concerning consumer reports and assist you through the dispute process should one arise.



While the information provided by background screening firms is useful, it should not be construed as legal advice. You should discuss your screening policy and any legislation applicable to your organization directly with your legal counsel.

This publication is for informational purposes only and nothing contained in it should be construed as legal advice. We expressly disclaim any warranty or responsibility for damages arising out this information. We encourage you to consult with legal counsel regarding your specific needs. We do not undertake any duty to update previously posted materials.