When you’ve received negative results on a background screening for a prospective tenant or employee, you may be wondering what you should do next. Can you simply move on to the next prospect? Or are you legally bound to notify the individual in question before moving forward with other candidates?
FCRA compliance requires that you inform potential employees and tenants in the event that their application has been denied based on the results of a consumer report. These "adverse action notices" are a necessary step after receiving negative results on a background check.
Can you send Adverse Action Notices electronically via email?
Pre-Adverse Action Obligations of the FCRA
If you plan on taking adverse action against an individual based on the results of a consumer report, you have the following obligations:
- Send a pre-adverse action notice before any action is taken.
- If you plan to take adverse action based on the consumer report findings, you must send the tenant or employee a Pre-Adverse Action notice within 3 days of receiving the consumer report.
- Though this notice is typically mailed, it may also be communicated verbally or by e-mail. Ultimately, it is best to refer to the individual’s application agreement – the consent agreement granting you the authority to pull the report – and contact each individual via their preferred communication method.
- The pre-adverse action notice should include:
- A copy of the consumer report.
- The name, address, and phone number of the reporting agency.
- A copy of the Fair Credit Reporting Act Summary of Rights, which the reporting agency should have provided you.
- Your contact information should they wish to dispute the findings.
Adverse Action Procedures
After pre-adverse action, the applicant has time to dispute any inaccurate findings on their consumer reports. If there are no disputes, you can then move to take adverse action - denying employment or rental agreements - with the applicant.
- Send an adverse action notice 5 days (or more) following the pre-adverse action notification, after a deny action is taken.
- The adverse action notice should include the following:
- The name, address, and phone number of the reporting agency you utilized.
- A statement that the reporting agency did not make the adverse decision, and can’t explain why the decision was made.
- Notice of the individual’s right to a free copy of their report from the screening agency within 60 days.
- Notice to the individual of their right to dispute the accuracy of the report.
- The individual’s credit score if the score was used.
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