What You Should Know About FCRA Regulations and Compliance

What You Should Know About FCRA Regulations and Compliance

Are you worried that perhaps your company could do a better job handling consumer data? If so, you have a valid concern. Every year, some of the largest organizations are caught mishandling private data.  

But this doesn’t have to be you. Whether your company is big or small, you can sidestep danger by knowing some of the essential Fair Credit Reporting Act FCRA regulations. 

What Is the Fair Credit Reporting Act (FCRA)? 

The Fair Credit Reporting Act is consumer protection legislation. It requires that the information kept by consumer reporting agencies be as accurate as possible. For example, it allows consumers to dispute and request updates or changes to erroneous data. It also regulates how companies such as yours can use that information. 

Where Businesses Often Go Wrong 

There are three primary mistakes that organizations make with consumer data. First of all, they fail to obtain the proper disclosure form that would allow them to view consumer data legally.

Second, if they fail to hire or choose to fire someone, they don’t give the individual a copy of the information that influenced that decision. And third, after taking an adverse action, the company fails to share additional information about the decision as legally required. 

Let’s look closer at the first problem—not obtaining the proper disclosure form. A federal court in California granted final approval in May 2021 to a $1.375 million class-action lawsuit against a floor covering company for this violation.

The company didn’t follow the federal guidelines for receiving approval to run background checks on potential employees. Instead, the company misused other consent forms.  

Required Release Form for FCRA Compliance 

FCRA regulations clearly state that businesses must obtain a signed independent release form before initiating background checks. The request can’t be part of another document. It must be a standalone form that makes clear that the applicant agrees to a background check. 

Creating and using the proper background release form sounds like a relatively basic requirement. However, the courts routinely see instances where businesses failed to comply.

Companies accused of wrongdoing include small as well as large companies like Universal Studios. According to a 2015 class-action lawsuit, the media giant also failed to alert job candidates and employees that they’re subject to credit inquiries and background checks. 

The Cost of Non-Compliance 

It’s easy to see how failure to comply with federal standards can cost your company hard-earned dollars. However, there’s more to consider than simply the cost of a court settlement.  

What effect would negative publicity have on your business? Class action lawsuits tend to gain media attention. Would the damage to your reputation make it more difficult for you to recruit talented employees? Would the notoriety harm your ability to apply for certain government contracts? 

Get Professional Help Before Problems Arise 

There’s a reason you’re not allowed to construct a high-rise apartment tower and only later consult the building codes. Likewise, why handle consumer data before consulting a professional

A qualified company steeped in the minutiae of FCRA regulations can help your organization process personal data safely. Expert consultants know the mistakes that other companies have made and can use that knowledge to direct your business to success. 

Choose an FCRA Regulations Expert Today 

ComplyTraq has been helping organizations stay within federal guidelines since the earliest days of the FCRA. Put that industry knowledge to use for your company. 

We have over 16,000 inspectors throughout the U.S. so that we can offer a quick turnaround with both on-site inspections and virtual inspections. And our prices are the same for all parts of the country. 

Contact us today to arrange an inspection that will help you avoid violations and keep you in full compliance with all FCRA regulations. 

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