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on September 09, 2022 FCRA Compliance Hiring and Recruiting

Does Pre-Adverse Action Mean a Candidate Isn't Hired?

Does Pre-Adverse Action Mean a Candidate Isnt Hired

Adverse action is a term used when employers, creditors, or lenders are making a negative decision against an individual based on information found on their consumer reports or background checks. Pre-adverse action takes place prior to the adverse action to inform the individual that adverse action is being considered. 

Does pre-adverse action mean a candidate isn't hired?

 

Why Use Adverse Action Notices?

Adverse action notices inform the consumer that negative action is being taken due to information on their background checks. If that data is inaccurate, the consumer must be aware of the harm that could cause to their livelihood. The Fair Credit Reporting Act (FCRA) is meant to protect consumers from being denied credit, housing or employment due to false or outdated information on their consumer reports or background checks. 

What Does Pre-Adverse Action Do?

Section 604 of the FCRA specifies when consumer reports can be used and by whom. Adverse action cannot be taken unless the consumer has received a copy of their report and a summary of their rights under the FCRA. When sending this information, the individual is notified via a pre-adverse action letter. Pre-adverse action simply notifies the candidate that a negative decision is being considered. They then have the chance to review their data and dispute any false or outdated information. 

Pre-Adverse = Pre-Decision

To clarify, pre-adverse action is before the negative decision has been made. If the candidate doesn't dispute their data or a reasonable amount of time passes after the pre-adverse action notice has been sent, then the employer can move forward with their decision. After the denial of employment or withdrawal of the employment offer, the candidate is notified with an adverse action notice. 

An Adverse Action notice must also include the following:

  • Contact information for the reporting agency that provided the consumer report
  • A statement that the consumer reporting agency is not the party taking the adverse action and cannot supply a reason for the adverse action
  • Notice of the applicant's right to obtain a second report, free of charge, from that same consumer reporting agency within a time period not to exceed 60 days
  • Notice which informs the candidate of their rights under the FCRA, including the right to dispute the information contained in the consumer report, relative to accuracy and completeness

All that to say, a candidate can still be hired after receiving a pre-adverse notice. If their information is misleading and they can dispute what was used against them, then they still have a chance.

We're happy to answer any more FCRA compliance questions! Contact us or read more about FCRA compliance here.

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Ryan Howard

Vice President, Business Development at VeriFirst, a BYL Company

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