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New Background Check Laws: Common Violations And Penalties Every Background Screening Provider Should Be Aware Of
Background screening is essential when hiring new employees, but it can be time-consuming, complicated, and rife with potential legal pitfalls if you don’t know what to look for.
In today’s blog post, we’ll explore the common violations that background screening providers should be aware of and their associated penalties. This will help ensure your organization complies with all relevant laws.
FCRA Compliance Overview
Infractions of the Fair Credit Reporting Act(FCRA) have far-reaching consequences for job applicants, workers, and their families, including financial hardship, career disruption, and a decreased quality of life.
The FCRA provides protections for individuals that the federal government supports. By providing such safeguards, the FCRA ensures that job applicants and workers can pursue legal action against companies that violate its provisions.
Violations of the Fair Credit Reporting Act come with potentially steep penalties for both companies and individuals found to be non-compliant.
If a plaintiff is successful in their FCRA violation case, the defendant may be issued damages that the individual suffered due to their actions. This would include financial penalties, orders forcing them to alter the way they process credit reports or background checks, and even additional damages covered by legal fees.
Violations typically fall under two categories: wilful and negligent noncompliance.
Wilful noncompliance occurs when a company knowingly violates the regulations of the Fair Credit Reporting Act, such as using outdated or erroneous information from a credit report to make decisions about an employee’s promotion despite providing accurate documentation proving that said information was incorrect.
Negligent noncompliance can occur if a company fails to adequately train its staff on FCRA rules or policies concerning its background check practices. So, everyone needs to stay informed of the regulations concerning credit reports and background checks in order to protect themselves from potential compliance violations and subsequent penalties.
Penalties for violating these provisions can be significant, so it’s important to partner with a reputable and FCRA-compliant screening provider who can help you avoid them.
Most Common Fair Credit Reporting Act Violations
New Background Check Laws: Holding Down Notices
Information about how your credit report will be shared, maintained, and users should be made available to you. Potential infractions include:
- Refusal on the part of a creditor to alert you about the release of unfavorable credit information.
- Negative action is taken based on your credit report without you being informed by a “user of credit information” (possible employer or lender). Another example is when a credit report user refuses to say where they got your information.
- Lending institutions would withhold credit report disclosure if a credit report was considered in granting you credit.
- Failing to inform you about your right to receive a free credit file from a creditor.
New Background Check Laws: Mixing Up Information
Mixing files can be a troubling problem in an office or even for us as individuals in our own life. Whether it’s misaligning files within an organization due to similar background information, such as matching similar surnames or mistakenly pulling the wrong file, it can lead to big consequences.
Our attention to detail when filing and sorting are vital in ensuring that we don’t cross-contaminate documents, especially when two people may have the same information! It’s essential to stay organized and attentive while dealing with any kind of paperwork because being careless with filing could easily result in a costly mistake.
Your credit report is a very sensitive document, and obtaining it without a valid need can be disastrous for you. It’s essential to understand when your credit report can legitimately be disclosed and the circumstances in which it shouldn’t. Only entities with an appropriate purpose, such as creditors, landlords, insurance providers, utility companies, and employers (with permission), should have access to this information.
Any misuse, such as when an employer pulls the report without permission or a creditor uses it to check on financial activity on a discharged debt in bankruptcy, is strictly prohibited and could lead to legal proceedings. Therefore, it’s important to familiarize yourself with the laws that regulate access to your credit report.
Reporting Inaccurate Information
Reporting inaccurate information is one of the most common violations of the Fair Credit Reporting Act.
This involves furnishing incorrect or incomplete credit information about individuals to a credit reporting agency, which can lead to devastating consequences for those affected. This type of false reporting can also leave individuals subject to collection agencies and excessive fees, creating huge financial strain when it should not exist.
Refurbishing Old Information
Keeping up with changing credit situations can be a lot of work, so it’s important to be aware that credit reports must be updated whenever your circumstances change. A violation of this might occur if a debt was reported as charged off when it was settled or paid off.
Similarly, other violations could come from reporting late payments when they were actually timely, reporting old debts as new ones, and even failing to report a discharged debt in bankruptcy.
Because of the potential impact of credit reports on an individual’s life, Congress passed the Fair Credit Reporting Act (FCRA) in 1970 to ensure consumers’ privacy and control over their own credit reports. Consumers have a legal right to receive a free copy of their credit report annually and to review the data used by credit bureaus to determine their credit ratings.
Title VI of the Consumer Credit Protection Act, also known as the Fair Credit Reporting Act (FCRA), protects everyone in the United States by mandating that consumer reporting organizations safeguard the fairness, accuracy, and privacy of consumers’ personal information.
New Background Check Laws: Conclusion
As stated earlier, the Fair Credit Reporting Act is full of rules, and it can take a lot of work to keep up with every little change.
That’s why you need a reliable FCRA compliant screening provider that will stay on top of updates for you and ensure that your reports are always accurate and in compliance. We hope this article has given you the right insights into the background screening process.
Until next time, take care and stay safe!