FCRA Tip: Keep Hands On

By Bill Wright

A federal trial court will conduct a trial on a Fair Credit Reporting Act claim because the employer streamlined its background check system. In this case, a bank used a third party service provider to conduct background checks in compliance with the FCRA. The provider would get consent from the applicant, conduct the check, and send the information to the bank. If the report included an unacceptable conviction, the bank would mark the applicant’s record “ineligible” and send it back to the provider for further processing. The provider then would send the applicant a Pre-Adverse Action Notice. On receipt of this notice, the applicant could, but didn’t have to, challenge the report. If the applicant challenged the report, further information would be collected and given to the bank, but, if the applicant chose not to challenge the report, the provider would go ahead and send the Adverse Action Notice with no further action by the bank. On these stipulated facts, the court ruled that, where the applicant does not challenge the report, the bank might be found to have taken final action before sending the Pre-Adverse Action, by marking the applicant’s record “ineligible.” The court needs a jury to determine whether the bank violated the FCRA. Manuel v. Wells Fargo Bank, National Assoc., No. 3:14cv238 (E.D. Va. August 19, 2015).

The moral here: have the provider report back, even when the applicant does not challenge the information.