• These four scenarios help exemplify FCRA in practice.

Scenario 1:

An employer advertises vacancies for cashiers and receives 100 applications. The employer wants just credit reports on each applicant because the employer plans to eliminate those with poor credit histories. What are the employer’s obligations?

The employer can get credit reports — one type of consumer report — if the employer notifies each applicant in writing that a credit report may be requested and if the employer receives the applicant’s written consent. Before the employer rejects an applicant based on credit report information, that employer must make a pre-adverse action disclosure that includes a copy of the credit report and the summary of consumer rights under the FCRA. Once an employer has rejected an applicant, the employer must provide an adverse action notice if credit report information affected the employer’s decision.

Scenario 2

An employer is considering a number of long-term employees for a major promotion. The employer wants to check their consumer reports to ensure that only responsible individuals are considered for the position. What are the employer’s obligations?

The employer cannot get consumer reports unless the employees have been notified that reports may be obtained and have given their written permission.

If the employees gave the employer written permission in the past, the employer need only make sure that the employees receive or have received a “separate document” notice that reports may be obtained during the course of their employment — no more notice or permission is required.

If the employees have not received notice and given the employer permission, the employer must notify the employees and get their written permission before the employer gets their reports.

In each case where information in the report influences the employer’s decision to deny promotion, the employer must provide the employee with a pre-adverse action disclosure. The employee also must receive an adverse action notice once the employer has selected another individual for the job.

Scenario 3

A job applicant gives an employer the okay to get a consumer report. Although the credit history is poor and that’s a negative factor, the applicant’s lack of relevant experience carries more weight in the employer’s decision not to hire. What’s the employer’s responsibility?

In any case where information in a consumer report is a factor in the employer’s decision — even if the report information is not a major consideration — the employer must follow the procedures mandated by the FCRA. In this case, the employer would be required to provide the applicant a pre-adverse action disclosure before the employer rejects his or her application. When the employer formally rejects the applicant, the employer would be required to provide an adverse action notice.

Scenario 4

The applicants for a sensitive financial position have authorized an employer to obtain credit reports. The employer rejects one applicant, whose credit report shows a debt load that may be too high for the proposed salary, even though the report shows a good repayment history.

The employer turns down another, whose credit report shows only one credit account, because the employer wants someone who has shown more financial responsibility. Is the employer obliged to provide any notices to these applicants?

Both applicants are entitled to a pre-adverse action disclosure and an adverse action notice. If any information in the credit report influences an adverse decision, the applicant is entitled to the notices — even when the information isn’t negative.