Whether you are hiring a new employee or contractor for an open position, or evaluating the subject of a background report for some other purpose, background screening can boost your confidence that the subject of a report is trustworthy and qualified. While you might want individuals in each of these groups to be thoroughly vetted, it’s important to note that there are many different “permissible purposes” — use cases defined by the Fair Credit Reporting Act (FCRA) — that guide an end user’s legal and compliance obligations when procuring background reports.
A permissible purpose simply indicates to a background check company how an end user intends to use a background report. Below are some of the most common permissible purposes under the FCRA:
Employment purposes
Legitimate business needs, like tenant screening
Credit checks or the underwriting of insurance to determine financial risk
Written instructions of the consumer
Importantly, each background report an end user procures must indicate a permissible purpose, and each report can only be used for that singular permissible purpose—in other words, an end user can’t use the same background report for more than one permissible purpose. No matter the reason, background reports typically include common components such as criminal record checks and previous employment history. While the results may appear similar, the full scope of information collected may differ. Obtaining and misusing public record data for any purpose other than its intended use can risk incurring heavy fines and additional charges.
In 2020, the Federal Trade Commission announced that a California mortgage broker would pay $120,000 after being found guilty of posting private information about consumers on Yelp. According to case documents, the broker posted the personal details online after a consumer left poor reviews of the company’s services. The Director of the FTC’s Bureau of Consumer Protection stated:
“Companies that use credit reports and scores have a legal obligation to keep that information confidential… They should not disclose that information to third parties without a legitimate reason to do so, and they certainly should not post that information on the Internet to embarrass or punish consumers, as happened here.”
While this case isn’t specific to employment screening, it illustrates that non-compliance with the FCRA can be costly. Beyond the financial ramifications, violations can be public, threatening an organization’s reputation. End users should consult their legal counsel to ensure the permissible purposes align with how they use background reports. For example, a report procured through Certified Contractors would not align with employment purposes, meaning it would be improper to use that same report to make employment decisions.
All said, ensuring you understand and comply with applicable laws and regulations is the best and only way to keep projects moving forward. Get your team certified and snag an employment account without a setup fee with Certified Contractors >
Disclaimer: This post is for informational purposes only and does not constitute professional advice. Always consult with legal counsel for personalized guidance.