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.