Rules Unlikely to Have Major Impact on Employers
New rules are going into effect November 1st that will address discrepancies in consumer credit reports; however, they will not have a big impact on employers and may even help employers avoid hiring someone with a false identity. These rules, written by various federal agencies as a result of provisions from the 2003 Fair and Accurate Credit Transactions Act of 2003 (FACTA), were created to prevent identity theft via ‘red flags’ raised in a credit report.
The only way employers will be affected is if they request a credit report from one of the three national credit bureaus (Experian, Equifax or TransUnion) as part of their background report. If the credit bureau finds an address discrepancy, the employer will receive a notice flagging the record. There are two situations in which a flag would arise:
1) if an applicant has moved to a new address that hasn’t been picked up yet by the credit bureaus
2) if there’s a case of identity theft with an applicant impersonating someone else
Those who use credit reports as part of their screening process will need to establish a policy on how they will verify the applicant’s identity, such as confirming information directly with the applicant, using third party sources or other materials, like employment applications.
In certain situations, once the address and identity of the applicant is clarified, an employer must send that information back to the credit bureaus. It is possible that the background firm providing the credit report may be able to act as the go-between for the employer and the national credit bureau in the administration of this rule; however, we will need to see how the process works once the rules are in place.
After the rules are implemented, Corporate Screening will provide its clients with a policy recommendation and provide guidance if and when a flagged notice is received. We will also provide clients requesting credit reports in their background screening program with training to ensure that the process is simple and clear.
Questions? Contact Corporate Screening Support at 800.229.8606 and select option 3 or contact your Account Representative.