Fair Credit Reporting Act. ** Summary and Forms **

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1 Fair Credit Reporting Act ** Summary and Forms ** In response to numerous questions from member agencies concerning the Fair Credit Reporting Act (FCRA) FAIA has prepared this summary report. Users are cautioned that the FCRA is a complex federal law and this summary should not be viewed as a complete analysis of the law. Members are encouraged to consult their own attorney for a complete analysis of the FCRA. Additionally, FAIA has a three-hour class on the FCRA that can be presented on-site. For information contact Tom, Ashley FAIA s Director of Education at tashley@faia.com. The FCRA impacts insurance agencies in at least three different manners: Personal lines clients find their applications for insurance subject to the agency obtaining motor vehicle reports (MVRs), prior claims loss reports (CLUE), and credit scores. These reports are collectively referred to as consumer reports by the FCRA. Commercial lines clients find their applications for insurance subject to the agency obtaining motor vehicle reports (MVRs) and various other reports. Commercial clients request the insurance agency provide them with a copy of an employee/potential employee s MVR to evaluate them for possible employment and/or promotion. The following pages will provide a summary of the steps an insurance agency should take I order to comply with the Fair Credit Reporting Act and the Florida Administrative Code. Sample forms are also provided. 1

2 Personal Lines Insurance Underwriting Prior to ordering a consumer report make certain there is a permissible purpose to obtain the report. The use of such report for insurance underwriting purposes is a permissible purpose. Also, any time the consumer gives written authorization to obtain a consumer report a permissible purpose exists. At the time of application advise the consumer that a consumer report will or may be ordered in connection with their application for insurance. Page 6 contains such form. Rule of the Florida Administrative Code, not the FCRA, imposes this requirement. Other states may or may not require such disclosure. If the consumer s application for insurance is declined or cancelled based in whole or in part on information contained in the consumer report the consumer has suffered adverse action. Additionally, if the consumer has a policy issued at a higher premium due to information contained in the consumer report an adverse action has been suffered. The consumer must be provided an adverse action notice, either by the insurance company or the insurance agency. Page 7 is a sample adverse action notice. The agency should adopt strict office procedures to make certain these steps are followed. Severe penalties can, and have, been imposed on users of consumer reports who violate the FCRA. Records should be maintained for at least two years. 2

3 Commercial Lines Insurance Underwriting Neither the FCRA nor Florida Administrative Code requires the commercial client to be advised that a consumer report will or may be obtained in connection with the underwriting of insurance. Additionally, there is no adverse action requirement imposed for commercial insurance underwriting. However, insurance agencies are cautioned that the contents of a MVR cannot be discussed with the commercial client of the agency or with the subject employee. Doing so ventures outside of insurance underwriting and moves into sharing a consumer report for use in employment purposes. At best, if an agency is asked by a commercial client to discuss the contents of the MVR of an employee they should reply with only, From an insurance underwriting perspective your employee or applicant is/is not acceptable to the insurance company. In order to discuss the contents of the MVR, or to provide a copy of the MVR to the employer or employee, the steps outlined in Providing MVRs to Commercial Clients must be followed. 3

4 Providing MVRs to Commercial Clients Before providing the MVR to a commercial client the agency should make certain the contract they signed with the MVR service allows sharing it with third parties. Two contracts reviewed by FAIA clearly do not allow such sharing. The agency must provide to each commercial client for whom MVRs will be ordered the Federal Trade Commission s (FTC) Prescribed Notice of User Responsibilities. This notice must be provided only once. Pages 8 to 13 contain such notice. Prior to ordering the MVR the agency must obtain the written permission of the employee/applicant. This signed document must be obtained with every MVR request. Page 14 is such document. Prior to ordering the MVR the agency must obtain a document signed by the commercial client stating the commercial client will comply with the FCRA. Debate exists as to whether this is needed with every MVR request or just once. The safest approach for the agency is to require such document with every MVR request, at the same time that the signed permission of the employee/applicant is obtained. Page 15 is such document. Once the MVR is obtained by the agency it must be provided to the commercial client accompanied by the FTC s Prescribed Summary of Consumer Rights. The safest approach for the agency is to provide this three-page notice with every MVR sent to a commercial client. Pages 16 to 18 compose this summary of rights. Records should be maintained for at least two years. The agency should adopt strict office procedures to make certain these steps are followed. Severe penalties can, and have, been imposed on users of consumer reports who violate the FCRA 4

5 Employer Compliance Issues Commercial employers often obtain consumer reports on employees and applicants for employment purposes. When these forms are used for employment purposes (hiring, not hiring, firing, promoting, and not promoting for example) the FCRA imposes strict compliances procedures. Commercial employers are highly encouraged to consult an employment practices attorney to develop a compliance policy. Pages 19 to 24 are sample forms that a commercial employer may find useful in complying with the FCRA. These forms are samples only should be used as a guide in developing forms for the use by a commercial employer. 5

6 Consumer Report Disclosure Information (Personal Auto and Homeowners Insurance) In connection with my application for insurance to the company shown below, I understand that the company and/or their agent may obtain a consumer report about me, to the extent that such reports may be obtained under the federal Fair Credit Reporting Act. Applicant s Signature Date Applicant s Printed Name Insurance Company Name Agency Name 6

7 Adverse Action Notification For Personal Lines Insurance (Date) (Name of Applicant) (Street Address) (City, State, Zip Code) Dear (Name of Applicant) On behalf of (Name of Insurance Company) we have carefully considered your application for insurance. We regret to inform you that: The company is not able to offer you an insurance policy The company will be canceling/non-renewing your policy Your policy has been issued at an increased premium This action is due to certain adverse information contained in your consumer report. We obtained this information from (Name of Consumer Reporting Agency), (Street Address of Consumer Reporting Agency), (City, State, Zip Code), (Telephone Number/Must Include Toll-Free Telephone Number if Available). (Name of Consumer Reporting Agency) was not responsible for the decision to deny your application for insurance coverage or increase the premium charge of your insurance and is unable to provide you with the specific reasons as to why this adverse decision was made. You have the right to obtain a free copy of your consumer report from (Name of Consumer Reporting Agency) within 60 days of this notice. You also have the right to dispute with the consumer reporting agency, the accuracy or completeness of any information in your consumer report. Sincerely, (Signature of Insurance Agent) (Typed Name of Insurance Agent) 7

8 Prescribed Notice of User Responsibilities This appendix prescribes the content of the required notice. NOTICE TO USERS OF CONSUMER REPORTS: OBLIGATIONS OF USERS UNDER THE FCRA The federal Fair Credit Reporting Act (FCRA) requires that this notice be provided to inform users of consumer reports of their legal obligations. State law may impose additional requirements. This first section of this summary sets forth the responsibilities imposed by the FCRA on all users of consumer reports. The subsequent sections discuss the duties of users of reports that contain specific types of information, or that are used for certain purposes, and the legal consequences of violations. The FCRA, 15 U.S.C u, is set forth in full at the Federal Trade Commission's Internet web site ( I. OBLIGATIONS OF ALL USERS OF CONSUMER REPORTS A. Users Must Have a Permissible Purpose Congress has limited the use of consumer reports to protect consumers' privacy. All users must have a permissible purpose under the FCRA to obtain a consumer report. Section 604 of the FCRA contains a list of the permissible purposes under the law. These are: As ordered by a court or a federal grand jury subpoena. Section 604(a)(1) As instructed by the consumer in writing. Section 604(a)(2) For the extension of credit as a result of an application from a consumer, or the review or collection of a consumer's account. Section 604(a)(3)(A) For employment purposes, including hiring and promotion decisions, where the consumer has given written permission. Sections 604(a)(3)(B) and 604(b) For the underwriting of insurance as a result of an application from a consumer. Section 604(a)(3)(C) When there is a legitimate business need, in connection with a business transaction that is initiated by the consumer. Section 604(a)(3)(F)(i) To review a consumer's account to determine whether the consumer continues to meet the terms of the account. Section 604(a)(3)(F)(ii) 8

9 To determine a consumer's eligibility for a license or other benefit granted by a governmental instrumentality required by law to consider an applicant's financial responsibility or status. Section 604(a)(3)(D) For use by a potential investor or servicer, or current insurer, in a valuation or assessment of the credit or prepayment risks associated with an existing credit obligation. Section 604(a)(3)(E) For use by state and local officials in connection with the determination of child support payments, or modifications and enforcement thereof. Sections 604(a)(4) and 604(a)(5) In addition, creditors and insurers may obtain certain consumer report information for the purpose of making unsolicited offers of credit or insurance. The particular obligations of users of this "prescreened" information are described in Section V below. B. Users Must Provide Certifications Section 604(f) of the FCRA prohibits any person from obtaining a consumer report from a consumer reporting agency (CRA) unless the person has certified to the CRA (by a general or specific certification, as appropriate) the permissible purpose(s) for which the report is being obtained and certifies that the report will not be used for any other purpose. C. Users Must Notify Consumers When Adverse Actions Are Taken The term "adverse action" is defined very broadly by Section 603 of the FCRA. "Adverse actions" include all business, credit, and employment actions affecting consumers that can be considered to have a negative impact -- such as unfavorably changing credit or contract terms or conditions, denying or canceling credit or insurance, offering credit on less favorable terms than requested, or denying employment or promotion. 1. Adverse Actions Based on Information Obtained From a CRA If a user takes any type of adverse action that is based at least in part on information contained in a consumer report, the user is required by Section 615(a) of the FCRA to notify the consumer. The notification may be done in writing, orally, or by electronic means. It must include the following: The name, address, and telephone number of the CRA (including a toll-free telephone number, if it is a nationwide CRA) that provided the report. A statement that the CRA did not make the adverse decision and is not able to explain why the decision was made. 9

10 A statement setting forth the consumer's right to obtain a free disclosure of the consumer's file from the CRA if the consumer requests the report within 60 days. A statement setting forth the consumer's right to dispute directly with the CRA the accuracy or completeness of any information provided by the CRA. 2. Adverse Actions Based on Information Obtained From Third Parties Who Are Not Consumer Reporting Agencies If a person denies (or increases the charge for) credit for personal, family, or household purposes based either wholly or partly upon information from a person other than a CRA, and the information is the type of consumer information covered by the FCRA, Section 615(b)(1) of the FCRA requires that the user clearly and accurately disclose to the consumer his or her right to obtain disclosure of the nature of the information that was relied upon by making a written request within 60 days of notification. The user must provide the disclosure within a reasonable period of time following the consumer's written request. 3. Adverse Actions Based on Information Obtained From Affiliates If a person takes an adverse action involving insurance, employment, or a credit transaction initiated by the consumer, based on information of the type covered by the FCRA, and this information was obtained from an entity affiliated with the user of the information by common ownership or control, Section 615(b)(2) requires the user to notify the consumer of the adverse action. The notification must inform the consumer that he or she may obtain a disclosure of the nature of the information relied upon by making a written request within 60 days of receiving the adverse action notice. If the consumer makes such a request, the user must disclose the nature of the information not later than 30 days after receiving the request. (Information that is obtained directly from an affiliated entity relating solely to its transactions or experiences with the consumer, and information from a consumer report obtained from an affiliate are not covered by Section 615(b)(2).) II. OBLIGATIONS OF USERS WHEN CONSUMER REPORTS ARE OBTAINED FOR EMPLOYMENT PURPOSES If information from a CRA is used for employment purposes, the user has specific duties, which are set forth in Section 604(b) of the FCRA. The user must: Make a clear and conspicuous written disclosure to the consumer before the report is obtained, in a document that consists solely of the disclosure, that a consumer report may be obtained. Obtain prior written authorization from the consumer. 10

11 Certify to the CRA that the above steps have been followed, that the information being obtained will not be used in violation of any federal or state equal opportunity law or regulation, and that, if any adverse action is to be taken based on the consumer report, a copy of the report and a summary of the consumer's rights will be provided to the consumer. Before taking an adverse action, provide a copy of the report to the consumer as well as the summary of the consumer's rights. (The user should receive this summary from the CRA, because Section 604(b)(1)(B) of the FCRA requires CRAs to provide a copy of the summary with each consumer report obtained for employment purposes.) III. OBLIGATIONS OF USERS OF INVESTIGATIVE CONSUMER REPORTS Investigative consumer reports are a special type of consumer report in which information about a consumer's character, general reputation, personal characteristics, and mode of living is obtained through personal interviews. Consumers who are the subjects of such reports are given special rights under the FCRA. If a user intends to obtain an investigative consumer report, Section 606 of the FCRA requires the following: The user must disclose to the consumer that an investigative consumer report may be obtained. This must be done in a written disclosure that is mailed, or otherwise delivered, to the consumer not later than three days after the date on which the report was first requested. The disclosure must include a statement informing the consumer of his or her right to request additional disclosures of the nature and scope of the investigation as described below, and must include the summary of consumer rights required by Section 609 of the FCRA. (The user should be able to obtain a copy of the notice of consumer rights from the CRA that provided the consumer report.) The user must certify to the CRA that the disclosures set forth above have been made and that the user will make the disclosure described below. Upon the written request of a consumer made within a reasonable period of time after the disclosures required above, the user must make a complete disclosure of the nature and scope of the investigation that was requested. This must be made in a written statement that is mailed, or otherwise delivered, to the consumer no later than five days after the date on which the request was received from the consumer or the report was first requested, whichever is later in time. IV. OBLIGATIONS OF USERS OF CONSUMER REPORTS CONTAINING MEDICAL INFORMATION Section 604(g) of the FCRA prohibits consumer reporting agencies from providing consumer reports that contain medical information for employment purposes, or in connection with credit or insurance transactions, without the specific prior consent of the consumer who is the subject of the report. In the case of medical information being 11

12 sought for employment purposes, the consumer must explicitly consent to the release of the medical information in addition to authorizing the obtaining of a consumer report generally. V. OBLIGATIONS OF USERS OF "PRESCREENED" LISTS The FCRA permits creditors and insurers to obtain limited consumer report information for use in connection with unsolicited offers of credit or insurance under certain circumstances. Sections 603(l), 604(c), 604(e), and 615(d) This practice is known as "prescreening" and typically involves obtaining a list of consumers from a CRA who meet certain preestablished criteria. If any person intends to use prescreened lists, that person must (1) before the offer is made, establish the criteria that will be relied upon to make the offer and to grant credit or insurance, and (2) maintain such criteria on file for a three-year period beginning on the date on which the offer is made to each consumer. In addition, any user must provide with each written solicitation a clear and conspicuous statement that: Information contained in a consumer's CRA file was used in connection with the transaction. The consumer received the offer because he or she satisfied the criteria for credit worthiness or insurability used to screen for the offer. Credit or insurance may not be extended if, after the consumer responds, it is determined that the consumer does not meet the criteria used for screening or any applicable criteria bearing on credit worthiness or insurability, or the consumer does not furnish required collateral. The consumer may prohibit the use of information in his or her file in connection with future prescreened offers of credit or insurance by contacting the notification system established by the CRA that provided the report. This statement must include the address and toll-free telephone number of the appropriate notification system. VI. OBLIGATIONS OF RESELLERS Section 607(e) of the FCRA requires any person who obtains a consumer report for resale to take the following steps: Disclose the identity of the end-user to the source CRA. Identify to the source CRA each permissible purpose for which the report will be furnished to the end-user. Establish and follow reasonable procedures to ensure that reports are resold only for permissible purposes, including procedures to obtain: 12

13 (1) the identity of all end-users; (2) certifications from all users of each purpose for which reports will be used; and (3) certifications that reports will not be used for any purpose other than the purpose(s) specified to the reseller. Resellers must make reasonable efforts to verify this information before selling the report. VII. LIABILITY FOR VIOLATIONS OF THE FCRA Failure to comply with the FCRA can result in state or federal enforcement actions, as well as private lawsuits. Sections 616, 617, and 621. In addition, any person who knowingly and willfully obtains a consumer report under false pretenses may face criminal prosecution. Section

14 NOTICE TO APPLICANT OF INTENT TO TO OBTAIN A CONSUMER REPORT Dear Applicant: In connection with your application for employment, we would like to procure certain background information concerning you which is contained in a consumer report. A consumer report may contain information regarding your: credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, driving record, mode of living, and/or criminal background. Before we may procure a consumer report, you must authorize such procurement in writing. You have the right to decline authorization for us to procure a consumer report. However, we will not consider you further for employment if you so decline. Below, you will find a release which will allow us to obtain a consumer report. Please read the release carefully before signing it and indicating your choice regarding disclosure. RELEASE TO PROCURE A CONSUMER REPORT I have read the Notice to Applicant of Intent to Obtain Consumer Report letter above. I understand that I have the right to decline authorization for (insert client name) to procure a consumer report concerning me. I understand that the consumer report may contain information concerning my: credit worthiness, credit standing, general reputation, personal characteristics, driving record, mode of living, and/or criminal background. Understanding these rights, I authorize (insert client name) to procure a consumer report concerning me. I do not authorize (insert client name) to procure a consumer report concerning me. NAME (Print Please): SIGNATURE: DATE: 14

15 Sample Letter from Commercial Employer to Insurance Agency Certifying Employer Understands and Will Comply with the FCRA (Date) (Insurance Agency s Name) (Street Address) (City, State, Zip Code) Dear (Insurance Agency s Name): (Company Name) has reviewed its obligations under the Fair Credit Reporting Act as a consumer report user, and certifies that it has received or will receive in advance of requesting information about the driving records of or consumer reports about any job applicant/employee, an authorization in which the applicant/employee authorizes in writing the procurement of his/her consumer reports, including driving records, and the procurement of additional reports about him/her from time to time to evaluate his/her insurability or for other permissible purposes. (Company Name) will retain the job applicant s/employee s authorization on file in accordance with the requirements of the law for at least two years, and provide to the applicant/employee all required notices. Sincerely, (Signature of Company Employee) (Typed Name of Company Employee) 15

16 Appendix A to Part 601 Prescribed Summary of Consumer Rights The prescribed form for this summary is as a separate document, on paper no smaller than 8x11 inches in size, with text no less than 12-point type (8-point for the chart of federal agencies), in bold or capital letters as indicated. The form in this appendix prescribes both the content and the sequence of items in the required summary. A summary may accurately reflect changes in numerical items that change over time (e.g., dollar mounts, or phone numbers and addresses of federal agencies), and remain in compliance. A Summary of Your Rights Under the Fair Credit Reporting Act The federal Fair Credit Reporting Act (FCRA) is designed to promote accuracy, fairness, and privacy of information in the files of every "consumer reporting agency" (CRA). Most CRAs are credit bureaus that gather and sell information about you -- such as if you pay your bills on time or have filed bankruptcy -- to creditors, employers, landlords, and other businesses. You can find the complete text of the FCRA, 15 U.S.C u, at the Federal Trade Commission's web site ( The FCRA gives you specific rights, as outlined below. You may have additional rights under state law. You may contact a state or local consumer protection agency or a state attorney general to learn those rights. You must be told if information in your file has been used against you. Anyone who uses information from a CRA to take action against you -- such as denying an application for credit, insurance, or employment -- must tell you, and give you the name, address, and phone number of the CRA that provided the consumer report. You can find out what is in your file. At your request, a CRA must give you the information in your file, and a list of everyone who has requested it recently. There is no charge for the report if a person has taken action against you because of information supplied by the CRA, if you request the report within 60 days of receiving notice of the action. You also are entitled to one free report every twelve months upon request if you certify that (1) you are unemployed and plan to seek employment within 60 days, (2) you are on welfare, or (3) your report is inaccurate due to fraud. Otherwise, a CRA may charge you up to eight dollars. You can dispute inaccurate information with the CRA. If you tell a CRA that your file contains inaccurate information, the CRA must investigate the items (usually within 30 days) by presenting to its information source all relevant evidence you submit, unless your dispute is frivolous. The source must review 16

17 your evidence and report its findings to the CRA. (The source also must advise national CRAs -- to which it has provided the data -- of any error.) The CRA must give you a written report of the investigation, and a copy of your report if the investigation results in any change. If the CRA's investigation does not resolve the dispute, you may add a brief statement to your file. The CRA must normally include a summary of your statement in future reports. If an item is deleted or a dispute statement is filed, you may ask that anyone who has recently received your report be notified of the change. Inaccurate information must be corrected or deleted. A CRA must remove or correct inaccurate or unverified information from its files, usually within 30 days after you dispute it. However, the CRA is not required to remove accurate data from your file unless it is outdated (as described below) or cannot be verified. If your dispute results in any change to your report, the CRA cannot reinsert into your file a disputed item unless the information source verifies its accuracy and completeness. In addition, the CRA must give you a written notice telling you it has reinserted the item. The notice must include the name, address and phone number of the information source. You can dispute inaccurate items with the source of the information. If you tell anyone -- such as a creditor who reports to a CRA -- that you dispute an item, they may not then report the information to a CRA without including a notice of your dispute. In addition, once you've notified the source of the error in writing, it may not continue to report the information if it is, in fact, an error. Outdated information may not be reported. In most cases, a CRA may not report negative information that is more than seven years old; ten years for bankruptcies. Access to your file is limited. A CRA may provide information about you only to people with a need recognized by the FCRA -- usually to consider an application with a creditor, insurer, employer, landlord, or other business. Your consent is required for reports that are provided to employers, or reports that contain medical information. A CRA may not give out information about you to your employer, or prospective employer, without your written consent. A CRA may not report medical information about you to creditors, insurers, or employers without your permission. You may choose to exclude your name from CRA lists for unsolicited credit and insurance offers. Creditors and insurers may use file information as the basis for sending you unsolicited offers of credit or insurance. Such offers must include a toll-free phone number for you to call if you want your name and address removed from future lists. If you call, you must be kept off the lists for two years. If you request, complete, and return the CRA form provided for this purpose, you must be taken off the lists indefinitely. 17

18 You may seek damages from violators. If a CRA, a user or (in some cases) a provider of CRA data, violates the FCRA, you may sue them in state or federal court. The FCRA gives several different federal agencies authority to enforce the FCRA: FOR QUESTIONS OR CONCERNS REGARDING: CRAs, creditors and others not listed below National banks, federal branches/agencies of foreign banks (word "National" or initials "N.A." appear in or after bank's name) Federal Reserve System member banks (except national banks, and federal branches/agencies of foreign banks) Savings associations and federally chartered savings banks (word "Federal" or initials "F.S.B." appear in federal institution's name) Federal credit unions (words "Federal Credit Union" appear in institution's name) State-chartered banks that are not members of the Federal Reserve System Air, surface, or rail common carriers regulated by former Civil Aeronautics Board or Interstate Commerce Commission Activities subject to the Packers and Stockyards Act, 1921 PLEASE CONTACT: Federal Trade Commission Consumer Response Center - FCRA Washington, DC Office of the Comptroller of the Currency Compliance Management, Mail Stop 6-6 Washington, DC Federal Reserve Board Division of Consumer & Community Affairs Washington, DC Office of Thrift Supervision Consumer Programs Washington, DC National Credit Union Administration 1775 Duke Street Alexandria, VA Federal Deposit Insurance Corporation Division of Compliance & Consumer Affairs Washington, DC FDIC Department of Transportation Office of Financial Management Washington, DC Department of Agriculture Office of Deputy Administrator - GIPSA Washington, DC

19 NOTICE TO APPLICANT CONCERNING INFORMATION CONTAINED IN A CONSUMER REPORT ( Pre-adverse action notice ) Dear Applicant: Pursuant to the release you signed in connection with your application for employment with (insert client name), we have procured a consumer report concerning you. There is information contained in the report that we feel bears unfavorably on your being employed with (insert client name). Please draw your attention to the highlighted portion of the report. Please be aware that we have not yet made a decision regarding your employment. We are giving you five (5) days from the date of this letter in order to provide us with any information that you deem appropriate concerning the highlighted portion of the consumer report. If we do not receive any information from you within five (5) days, we will not consider you further for employment. If you do send us information, we will consider that information in deciding whether or not to hire you. Attached to this letter you will find a copy of the consumer report and A Summary of Your Rights Under the Fair Credit Reporting Act. This sample form may be used by the employer as a guide in developing their own form in consultation with legal counsel. 19

20 NOTICE TO APPLICANT CONCERNING DENIAL OF EMPLOYMENT BASED UPON INFORMATION CONTAINED IN CONSUMER REPORT ( Adverse action notice ) Dear Applicant: (Insert client name) has denied your application for employment, either in part or in whole, based upon information contained in the consumer report we previously provided to you. Below please find the name, address, and telephone number of the consumer reporting agency that supplied us with the report. Please understand that the consumer reporting agency that supplied us with the report did not make the decision not to hire you and, thus, cannot give specific reasons for our action. You have the right to dispute the accuracy of any information contained in your consumer report. If you decide to do so, you should contact the consumer reporting agency listed below. Finally, you are entitled to receive an additional free copy of the consumer report from the consumer reporting agency upon request within sixty (60) days. CONSUMER REPORTING AGENCY: ADDRESS: TELEPHONE NUMBER: This sample form may be used by the employer as a guide in developing their own form in consultation with legal counsel. 20

21 NOTICE TO APPLICANT OF INTENT TO OBTAIN AN INVESTIGATIVE CONSUMER REPORT Dear Applicant: In connection with your application for employment, we would like to procure certain background information concerning you which is contained in an investigative consumer report. An investigative consumer report may contain information regarding your: credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, mode of living, and/or criminal background. This information may be gathered from personal interviews with your neighbors, friends, and/or associates (e.g., former employers). Before we may procure an investigative consumer report, you must authorize such procurement in writing. You have the right to decline authorization for us to procure an investigative consumer report. However, we will not consider you further for employment if you so decline. We intend to ask your former employer(s) the following questions concerning you: * What were the dates of your former employment? What position(s) did you hold? * Were you ever demoted or otherwise disciplined? If so, what were the circumstances. * Did you perform your job in a satisfactory manner? Under what circumstances did you leave? * Would you rehire the individual? [Note: any additional questions that will be asked should be added here.] On the back of this form you will find a release which will allow us to obtain an investigative consumer report concerning the foregoing questions. Please read the release carefully before signing it and indicating your choice regarding disclosure. This sample form may be used by the employer as a guide in developing their own form in consultation with legal counsel. 21

22 RELEASE TO PROCURE AN INVESTGATIVE CONSUMER REPORT I have read the Notice to Applicant letter attached to this release I understand that I have the right to decline authorization for (insert client name) to procure an investigative consumer report concerning me. I understand that the investigative consumer report may contain information concerning my: credit worthiness, credit standing, general reputation, personal characteristics, mode of living, and/or criminal background. I also understand that this information may be gathered from personal interviews with my neighbors, friends, and/or associates (e.g., former employers). As disclosed on the back of this form, I understand the nature and scope of the investigation that is going to be made into my background. Understanding these rights, I authorize (insert client name) to procure an investigative consumer report concerning me. I do not authorize (insert client name) to procure an investigative consumer report concerning me. CONSUMER REPORTING AGENCY: ADDRESS TELEPHONE NUMBER: This sample form may be used by the employer as a guide in developing their own form in consultation with legal counsel. 22

23 NOTICE TO APPLICANT CONCERNING INFORMATION CONTAINED IN INVESTIGATIVE CONSUMER REPORT ( Pre-adverse action letter for investigative consumer report) Dear Applicant: Pursuant to the release you signed in connection with your application for employment with (insert client name), we have procured an investigative consumer report concerning you. There is information contained in the report that we feel bears unfavorably on your being employed with (insert client name). Please draw your attention to the highlighted portion of the report. Please be aware that we have not yet made a decision regarding your employment. We are giving you five (5) days from the date of this letter in order to provide us with any information that you deem appropriate concerning the highlighted portion of the report. If we do not receive any information from you within five (5) days, we will not consider you further for employment. If you do send us information, we will consider that information in deciding whether or not to hire you. Attached to this letter you will find a copy of the investigative consumer report and A Summary of Your Rights Under the Fair Credit Reporting Act. This sample form may be used by the employer as a guide in developing their own form in consultation with legal counsel. 23

24 NOTICE TO APPLICANT CONCERNING DENIAL OF EMPLOYMENT BASED UPON INFORMATION CONTAINED IN INVESTIGATIVE CONSUMER REPORT (Adverse action letter based on investigative consumer report) Dear Applicant: (Insert client name) has denied your application for employment, either in part or in whole, based upon information contained in the investigative consumer report we previously provided to you. Below please find the name, address, and telephone number of the consumer reporting agency that supplied us with the report. Please understand that the consumer reporting agency that supplied us with the report did not make the decision not to hire you and, thus, cannot give specific reasons for our action. You have the right to dispute the accuracy of any information contained in your investigative consumer report. If you decide to do so, you should contact the consumer reporting agency listed below. Finally, you are entitled to receive an additional free copy of the investigative consumer report from the consumer reporting agency upon request within sixty (60) days. CONSUMER REPORTING AGENCY: ADDRESS: TELEPHONE NUMBER: This sample form may be used by the employer as a guide in developing their own form in consultation with legal counsel. 24