Laws and Regulations

There are several laws that govern private and public corporations, and the Consumer Reporting industry.

These laws and regulations include the following:

Fair Credit Reporting Act (FCRA)

The Fair Credit Reporting Act was originally designed to improve the accuracy of information reported in consumer credit files. It regulates the collection, dissemination and use of consumer information.

Simply speaking, this Act requires employers to obtain your consent before checking information in your background, and provide you with a Summary Of Your Rights as a consumer. This may include information about a consumer’s credit standing or capacity, character, general reputation, or personal traits and characteristics.

Employers that have conducted external (third party) background checks AND have decided not to extend a job offer, must also provide a Pre-Adverse Action Notice and Post-Adverse Action Notice (usually in the form of an email or letter) to the applicant. These notices state that they are not hiring the person based in whole or in part on the results of a background check. The employer must provide a copy to the applicant of the completed background report as well as a Summary of Consumer Rights at that time in case the applicant wishes to dispute the information reported about them. Typically the Consumer Reporting Agency issuing the report is not involved in the hiring decision process.

Fair and Accurate Credit Transactions Act (FACTA)

The Fair Credit Reporting Act (FCRA), enforced by the Federal Trade Commission, promotes accuracy in consumer reports and is meant to ensure the privacy of the information in them. The FCRA was amended by the Fair and Accurate Credit Transactions Act of 2003 (FACTA) (PL 108-159, 12/04/03). The FACTA requires the Commission and other agencies to implement many of the new provisions of the FCRA by means of rules and regulations issued in 2004.

FCRA Text Revised September 2018.

Sarbanes Oxley Act

The Sarbanes Oxley Act, also known as SOX, as enacted on July 30, 2002. This act was designed to improve the accuracy and reliability of corporate disclosures, financial practices and corporate governance, as related to securities laws.

U.S. Patriot Act (2001)

The purpose of the USA PATRIOT Act is to deter and punish terrorist acts in the United States and around the world, to enhance law enforcement investigatory tools, and other purposes, some of which include:

  • To strengthen U.S. measures to prevent, detect and prosecute international money laundering and financing of terrorism;
  • To subject to special scrutiny foreign jurisdictions, foreign financial institutions, and classes of international transactions or types of accounts that are susceptible to criminal abuse;
  • To require all appropriate elements of the financial services industry to report potential money laundering;
  • To strengthen measures to prevent use of the U.S. financial system for personal gain by corrupt foreign officials and facilitate repatriation of stolen assets to the citizens of countries to whom such assets belong.

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