Background Check Companies Must Follow the Same Rules as Credit Bureaus
Most people think of the FCRA as a credit reporting law. It is. But the Fair Credit Reporting Act (15 U.S.C. § 1681) applies much more broadly than that. Under the FCRA, any company that compiles consumer reports for the purpose of employment, housing, or other eligibility decisions is classified as a Consumer Reporting Agency (CRA). That includes background check companies.
Companies like Sterling, Checkr, HireRight, Accurate Background, GoodHire, and dozens of others are required to follow the same accuracy and dispute procedures that apply to Equifax, Experian, and TransUnion. When a background check report contains inaccurate information that costs you a job, an apartment, or any other opportunity, the FCRA provides you with clear legal rights and remedies.
Your Rights Before a Background Check Is Run
Before an employer, landlord, or other entity can obtain a background check report on you, they must comply with specific FCRA requirements:
- Written consent. The employer or landlord must obtain your written authorization before running a background check. This authorization must be on a standalone document -- it cannot be buried in the fine print of an employment application or lease agreement.
- Clear disclosure. You must receive a clear and conspicuous written disclosure informing you that a consumer report may be obtained for employment or housing purposes. This disclosure must be in a document that consists solely of the disclosure.
If an employer ran a background check on you without your written consent, that alone may be a violation of the FCRA.
Common Background Check Errors
Background check errors are far more common than most people realize, and the consequences can be life-altering. Common errors include:
- Criminal records belonging to someone else. Background check companies often use name-based matching rather than fingerprint-based identification. If someone with a similar name has a criminal record, it can end up on your report. This is particularly common for people with common names.
- Expunged or sealed records still appearing. If you had a criminal charge that was dismissed, expunged, or sealed by a court, it should not appear on a background check. But background check companies frequently pull from outdated databases that have not been updated to reflect expungements.
- Outdated information. The FCRA generally prohibits reporting criminal arrests that did not result in a conviction if the arrest is more than seven years old. Some background check companies include these old arrests anyway.
- Misclassified charges. A misdemeanor may be reported as a felony, or a dismissed charge may be reported as a conviction. These classification errors can be the difference between getting a job and being disqualified.
- Wrong disposition. A case that resulted in acquittal or dismissal may be reported as a conviction.
- Records from a different jurisdiction. A criminal record from another state that does not belong to you may appear due to matching errors.
If you believe a background check contained inaccurate information, take these steps immediately:
- Request a copy of the report from the background check company (you have a right to this under the FCRA)
- Identify every piece of inaccurate information
- File a written dispute with the background check company, explaining what is wrong and providing any supporting documentation
- The company must investigate within 30 days and correct any inaccurate information
- Keep copies of everything you send and receive
The Adverse Action Process: What Employers Must Do
When an employer decides not to hire you, or to rescind a job offer, based in whole or in part on information in a background check, they must follow a specific process called the adverse action procedure. This is one of the most frequently violated provisions of the FCRA.
The process has two required steps:
- Pre-adverse action notice. Before making a final decision, the employer must provide you with a copy of the background check report, a written summary of your rights under the FCRA (known as the "Summary of Rights" document), and a reasonable period of time to review the report and dispute any inaccuracies. This is your opportunity to identify and challenge errors before the decision becomes final.
- Final adverse action notice. If the employer proceeds with the adverse decision after the waiting period, they must send you a final notice that includes: the name and contact information of the background check company, a statement that the company did not make the employment decision, and a notice of your right to dispute the accuracy of the report and to obtain a free copy of the report within 60 days.
Many employers skip one or both of these steps. Some send both notices simultaneously, which defeats the purpose of the pre-adverse action notice. Others never provide a copy of the report at all. Each of these failures is a potential FCRA violation.
Tenant Screening: The Same Protections Apply
If you have been denied an apartment or had a lease application rejected based on a tenant screening report, the same FCRA protections apply. Tenant screening companies are Consumer Reporting Agencies under the FCRA, and landlords who use these reports are subject to the same adverse action requirements as employers.
Common errors in tenant screening reports include:
- Eviction records belonging to someone else
- Criminal records that do not belong to you
- Incorrect rental history information
- Outdated eviction records that should have been removed
If a landlord denied your application based on inaccurate screening information, you have the same rights to dispute the information and pursue legal remedies as you would in the employment context.
Damages for Background Check Violations
The FCRA provides substantial remedies for consumers harmed by inaccurate background checks:
- Actual damages: Compensation for lost wages from a job you did not get, the cost of having to find alternative housing, emotional distress, and other tangible harm caused by the inaccurate report
- Statutory damages: Between $100 and $1,000 per violation for willful noncompliance, available even without proof of specific monetary harm
- Punitive damages: Additional damages for willful violations, which courts may award to punish particularly egregious conduct by background check companies or employers
- Attorney's fees and costs: The FCRA requires the defendant to pay your attorney's fees if you prevail, meaning there is no out-of-pocket cost to you for legal representation
You should consider speaking with a consumer protection attorney if:
- You were denied a job or housing based on a background check that contained inaccurate information
- An employer or landlord did not provide you with a copy of the report before making an adverse decision
- You never gave written consent for the background check to be run
- A background check shows criminal records, evictions, or other information that does not belong to you
- Expunged, sealed, or dismissed records are appearing on your background check
- You disputed an error with the background check company and they failed to correct it
Because the FCRA requires the defendant to pay attorney's fees in successful cases, there is typically no cost to you for pursuing your rights. A consultation is free, and an attorney can quickly evaluate whether you have a viable claim.