Free Credit Report Regulations For Use Of Your Credit Report Data |
|
A set of new model notices published as final rules by the FTC on Nov. 30, 2004, in the Federal
Register went into effect Jan. 31, 2005, which include latest summaries of
rights and responsibilities that should be incorporated in the organizations' hiring and employment procedures by the employers and HR managers. The new notice to users of financial reports provides that an employer must have written permission to obtain free credit report information for employment purposes, such as hiring and promotion. Moreover, employers must notify all employees and applicants clearly in writing that they intend to use free credit report in hiring or promotion procedures. After President Bush signed an FCRA reauthorization bill into law, it took one year for the final rules containing the new notices to be published. About five years ago, an FTC opinion letter created a problem by raising some major hurdles for employers conducting third-party investigations of suspected employee misconduct. The above rules reflect the legislative fix to this problem. The FTC was required to make these changes to the FCRA reporting and notification regulations by the Congress when it passed the Fair and Accurate Credit Transactions (FACT) Act in November 2003. The rights and responsibilities of employers that use free credit report in any employment practice are clearly defined by the final rules. Written Authorization Required According to the new model notice, an employee's or applicant's written authorization is required before the employer obtains the individual's free credit report, and if an employer takes an adverse action, such as denying employment or promotion based on information in a free credit report, the rules require the employer to notify the applicant or employee with the name, address and phone number of the agency that produced the report. A controversy that began in 1999 when the FTC issued what is known as the Vail opinion letter, has now being resolved with the final regulations. The opinion letter had stated that the notification and disclosure requirements of the FCRA applied whenever employers hired third-party organizations to investigate allegations of workplace sexual harassment. Any type of free credit report of an employee or applicant can be obtained by an employer. The three major credit bureaus Experian, Equifax, and TransUnion compile free credit reports individually and collectively. The individual report is a compilation of your credit history according to that credit bureau. A comprehensive free credit report or 3-in-1 is a report with combined data compiled by the three national credit bureaus. This report can also be obtained via regular mail within 24 hours and it is useful for comparing credit information easily, because information collected by the bureaus may vary. The new model notice to users establishes that by following procedures outlined in Section 603(x) of the FCRA, as amended by the FACT Act, any employer conducting a third-party investigation of suspected employee misconduct (such as a sexual harassment investigation) no longer has to comply with the notification requirements. The employer must provide the subject of the investigation with a summary describing the inquiry's nature and scope, if the employer takes any adverse employment action during the course of a third-party investigation, Attorneys and business owners created a furor over the Vail opinion letter and argued that the FTC position severely hampered employers' ability to conduct impartial workplace investigations. More than four years of lobbying efforts from a coalition of business groups and employers led by the Society for Human Resource Management resulted in the final revision of the notification requirements, which include a summary of rights granted to victims of identity theft under the FACT Act. The victims can now place fraud alerts on his/her free credit report and block businesses and credit bureaus from reporting information in their credit files that is a result of identity theft, as per law. Further, the law prevents outside firms from obtaining information about accounts or transactions in their name that resulted from identity theft. |
