We started last week explaining what it means to be Consumer Reporting Agency and examining credit protection.

Here’s a snapshot of what we learned:

*  A company is a CRA if it assembles and evaluates consumer report information and provides those reports to third parties for monetary purposes.

*  The Fair Credit Reporting Act (FCRA) holds CRAs and the creditors that provide the information in your credit report responsible for correcting inaccurate or incomplete information in your report.

*   If there is an FCRA violation, you can sue on grounds of willful violation or negligent violation.

There is a lot of moving parts when it comes to protecting your credit information and disseminating that info when requested or needed, say for a background screening for a new job. Today, we’re going to tackle the roles in compliance from an employers perspective and help you understand your role as a user of consumer reports.

First up, Furnisher.

The government defines a furnisher as: “an entity that furnishes information relating to consumers to one or more consumer reporting agencies for inclusion in a consumer report.”

Let us break that down for you. A furnisher is someone – like a creditor or phone company or other small business – who gives your information to a CRA like us. Under FCRA guidelines, furnishers are held to strict standards of informational accuracy when sending it to a CRA.

If you are an employer, think of the furnisher as the starting point in the stream of information about your candidate.

Next, we have the Consumer Reporting Agency, or as those of us in the industry call it, the CRA. You’ll sometimes hear it called a credit bureau, too.

This is the best definition we’ve found of a CRA. It comes courtesy of the Consumer Finance Protection Bureau (CFPB): Consumer reporting agencies or companies collect information and provide reports on consumers that are used to decide whether to provide consumers credit, insurance, employment, and for other purposes.

According to the CFPB, there are large, nationwide CRAs like Equifax, Experian and TransUnion and specialty reporting companies who focus on certain industries.

We, at Active Screening, are considered a specialty CRA because we put together a person’s consumer report information as it pertains to the hiring process or for other employment purposes. Some of the types of things we compile are criminal records, work history, and driving history (this is a small slice, for the whole pie, click here).

We get this data from a furnisher. See what we’re doing here? Working our way down the information stream.

Once a candidate’s credit report or background screening is complete it is then funneled to the end-user. In the case of our discussion, that’s you – the employer. But wait! There is something called compliance that you must meet. Here’s a great post from Alexandria that explains compliance and even offers a link to a handy checklist.

Before a CRA or any screening company hands over the information its compiled on a candidate, the end-user MUST confirm a few things:

  • You understand and comply with all FCRA rules and regs
  • You are only requesting screenings for employment reasons
  • You tell candidates that you want to run a background screening and get their written consent BEFORE ordering the screening
  • You double-check the results and, if you choose not to hire a candidate based on the screening, you need to follow adverse action policies (read this story from RJ for everything you need to know about notification requirements)

In most positive hiring instances this is where the information stream from furnisher to CRA to end-user (that’s you, the employer) wraps up. Congrats on the new hire!

As a job candidate, or just as someone who is interested or concerned about where their credit history and personal information may end up, it’s important to know that there is another entity who may buy your info: the re-seller.

Here’s the fancy definition: “A consumer reporting agency that – (i) assembles and merges information contained in the database of another consumer reporting agency or multiple consumer reporting agencies concerning any consumer for purposes of furnishing such information to any third party, and (ii) does not maintain a database of the assembled or merged information from which new consumer reports are produced.”

Let’s break that down a little bit. Basically a re-seller is someone who buys information from a CRA (us) and then re sells it. They would come to us and say, “I need this information about John Doe.” Then we report it and they deliver the results to their client.

To clarify. CRAs like us gather, store and report information. Re-sellers gather and report.

The CFPB states that re-sellers are held to high disclosure and certification requirements. In other words, they have to put forth some effort to assure their client that the info they got from the CRA is current and accurate. That’s called re-investigation.

So there you have it! Hopefully you understand the roles of compliance a bit better. But if you still have questions, we’d love to hear from you. Better yet, check out our 2014 Applicant Screening Guide. This FREE guide gives you the knowledge and tools necessary to optimize your screening policy and improve the overall quality of your workplace.

Happy Hiring!

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