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The First Steps to Compliance — Understanding Notice and Disclosure Requirements

Stephanie Cook | Uncategorized

In the wake of recent class action lawsuits with several large companies such as Dollar General, Home Depot, and Michaels Stores, compliance with the rules and regulations of the Fair Credit Reporting Act (FCRA) is on everyone’s mind. If you are conducting background checks through a company like PSI, you have obligations to meet under the Fair Credit Reporting Act, and those obligations shouldn’t be taken lightly, as litigation under the FCRA is on the rise. So where are companies going wrong? For the majority, the very first steps are those that are missed or incorrectly executed.

The Fair Credit Reporting Act regulates how consumer reports such as background checks, credit checks, and even checks regarding a person’s general character, such as references, can be used by employers. The FCRA was designed to protect an individual’s private information, and to ensure that companies that were using consumer reports were properly regulated. Further, it provides individuals with certain rights to ensure the accuracy of any information reported about them and gives them the ability to dispute inaccurate information. As your Pre-employment/background screening partner, PSI is here to assist you in maintaining compliance with the Fair Credit Reporting Act.

The following steps are required prior to obtaining a consumer report or background investigation:

  • Notice and Disclosure- prior to requesting a background check, an applicant must be notified in writing that you intend to obtain a consumer report for employment purposes.
  • Authorization- written authorization must be obtained from the applicant or employee before requesting a background check.
  • The Notice and Disclosure can be combined with the Authorization, but it must NOT include any other employment information. It must be a STANDALONE document. One of the most recent class action law suits filed against the market chain Whole Foods Market, accused the company of failing to provide this documentation in a standalone format.


How We Can Help

PSI provides a consent form template that meets all the above requirements, to every client during the account setup process. This document is referred to as the “Employment Notification and Acknowledgement Form.” If you are currently using PSI’s template consent form, or having your applicants submit their information through our secured online system, at, you are in compliance with these steps. If you are a client of PSI and in need of the “Employment Notification and Acknowledgement Form” template for your company, just contact one of our friendly staff members for assistance at (706) 235-7574.

Be sure to also check into any state specific requirements that you may need to meet regarding notice and disclosure when conducting background checks. Some states, such as California, have additional requirements that must be meet. If you are a PSI client, you can find state specific information by logging in under BackgroundWise and visiting our HR State and Federal Helpdesk.

*This notice is intended to assist you in complying with the Fair Credit Reporting Act (FCRA). This should not be considered legal advice. As with any issue of legality, we recommend that you contact your corporate attorney to ensure your company is in compliance with the FCRA.