By Madeline Laviolette
The Fair Credit Reporting Act (FCRA) is a federal law that promotes accuracy, fairness and privacy of the data assembled by Consumer Reporting Agencies (CRAs) such as credit bureaus, medical information companies and tenant screening services. Organizations that provide employment and income verification services like The Work Number® from Equifax are governed by the FCRA. Here’s what that means for employers and employees.
FCRA provides consumer transparency since consumers can have access to the information the CRA has on them.
Consumers have the ability to dispute information they believe to be inaccurate or incomplete.
Users of the information for credit, insurance, or employment purposes must notify the consumer when an adverse action is taken on the basis of such reports.
Consumers have control and can place or remove a data freeze for their data.
Verifiers (organizations looking for the data) must certify to CRAs that they have a “permissible purpose” for requesting a verification of an employee’s personal information contained in the files of a CRA, which is considered a consumer report.
Examples of permissible purpose include an application containing consent for some type of credit, a verification of employment, or qualification for social service benefits.
Verifier clients are credentialed to help verify legitimacy of the organization, permissible purpose, and adequate data security controls, among other things, prior to receiving access to the data.
Individual verifier users are authenticated at log-in to help provide clear line-of-sight as to who is requesting the verification.
Permissible purpose audits and recredentialing on verifiers and transactions help ensure proper usage of the data received. The Work Number also requires auditable consent for income information.
Employers providing information to consumer reporting agencies also have specific obligations as data furnishers under the FCRA, including, but not limited to:
Furnishers are prohibited from providing information to a CRA they know or have reasonable cause to believe is inaccurate.
If an employee files a dispute with a CRA, the CRA will notify the party furnishing the data, and that party must investigate the dispute and report the results to the CRA within the required timeframe.
If the disputed data is found to be inaccurate or incomplete, the data furnisher must promptly delete or modify that data and work with the CRA to do the same.
Even outside of disputes, if it is ever determined that data is not complete or accurate, the furnisher must promptly notify the CRA of that determination and provide any corrections or additional information that will make that data complete and accurate.
If the data is not corrected, The CRA may be required to block the data from being accessed by verifiers for verification of income or employment until the data has been corrected. Failure to furnish accurate information or to correct information that is determined to be incomplete or inaccurate may result in penalties under the FCRA.
If verifiers cannot access the most current and accurate data as part of their decision processes, determinations may not best reflect your employees’ financial situation and could impact their ability to obtain credit and aid when they might need it most. Our focus on the FCRA helps employers reduce their risk and empowers employees to live their financial best with timely access to credit and benefits information as consumers. Learn more about how a staffing company was able to streamline the verification process and provide better service for their employees.
The information provided is intended as general guidance and is not intended to convey any tax, benefits, or legal advice. For information pertaining to your company and its specific facts and needs, please consult your own tax advisor or legal counsel. Links to sources may be to third party sites. We have no control over and assume no responsibility for the content, privacy policies or practices of any third party sites or services.