FCRA Background Check – Requirements for Employers


New employee receiving contract to sign representing FCRA background check requirements

You’re hiring, and you know you need to run a background check, but what does that really involve? If you’ve heard the term “FCRA background check” thrown around, but you’re not 100% sure what it means, you’re not alone.

The Fair Credit Reporting Act (FCRA) is a federal law enacted in 1970 that governs how consumer reports—including employment background checks—are collected, used, and shared by third-party consumer reporting agencies (CRAs). For employers who use CRAs to screen job candidates, complying with the FCRA is critical, not just to avoid lawsuits and fines, but to ensure a fair, transparent, and legally sound hiring process.

At Certn, we’ve helped more than 20,000 organizations, from scrappy startups to global giants like Interac and Deloitte, navigate compliance complexities, including the requirements for FCRA-compliant screening. We’re not new to this. Since 2016, we’ve delivered fast, accurate, and fully compliant background checks. Our AI and automation-powered platform removes the friction from hiring without cutting corners, giving HR teams peace of mind and candidates the respect they deserve. When it comes to background checks, we’re the friendly experts who make trust move faster.

While Certn’s FCRA Requirements for Employers outlines the broader obligations, one of the most critical and commonly misunderstood parts of the FCRA compliance is following the adverse action notice requirements. If you decide not to move forward with a candidate based in whole or in part on information in their background check report, such as a criminal record, credit history, or another flagged item, the FCRA legally requires you to follow a specific set of steps. 

In this blog post, we break down what those steps look like, from issuing a pre-adverse action notice letter to making a final decision, and explain how following them can help protect your organization from legal risk and promote fair, transparent hiring practices.

Let’s get started!

What Is FCRA?

FCRA, short for the Fair Credit Reporting Act, is a US federal law enacted in 1970 to regulate the collection, dissemination, and use of consumer information, including credit reports and background checks. While it was originally designed to protect consumers from misuse of their credit information, its scope has expanded significantly.

Today, the FCRA governs how third-party companies (known as consumer reporting agencies or CRAs) collect and share personal information for employment purposes, tenant screening, insurance underwriting, and more. Employers, landlords, and other users of this data must comply with strict FCRA requirements when conducting an FCRA background check.

This is why employers turn to Certn. With deep expertise in US background screening regulations, we deliver more than just checks. We help teams navigate the complexity of compliance, avoid costly oversights, and design screening programs that are thorough, fair, and future-ready. Whether you’re screening in one jurisdiction or across the country, Certn gives you the tools and insights to do it right, the first time.

What Is an FCRA Background Check?

An FCRA background check refers to any background screening conducted in accordance with the FCRA. As we mentioned above, these checks are used by employers, landlords, and others to make decisions about employment, housing, or creditworthiness, and must meet strict standards for accuracy, fairness, and candidate transparency. 

Under the FCRA, individuals must give informed, written consent before a check is performed, and they must receive a copy of the report and a notice of rights if adverse action is taken. You can read more about adverse action in this blog post: Adverse Action Notice Requirements – HR’s Essentials.

Here’s what an FCRA-compliant background check may include:

  • Criminal History Checks
    Searches county, state, and federal records for convictions, pending charges, or legal issues. In many states, the FCRA restricts the reporting of non-conviction records older than seven years.
  • Credit History Reports
    Reviewed only when relevant to the role (e.g., financial services or executive positions), these checks help assess financial responsibility.
  • Employment Verification
    Confirms past job titles, dates of employment, and sometimes the reason for departure, helping verify the accuracy of a candidate’s résumé.
  • Education Verification
    Validates academic credentials, such as degrees, diplomas, and certifications, to ensure claims match official records.
  • Professional Reference Checks
    Offers insight into a candidate’s past performance, conduct, and work style based on feedback from former managers or colleagues.
  • Identity Verification
    Uses government-issued ID and authoritative databases to confirm a candidate’s identity and reduce the risk of impersonation or fraud.
  • Motor Vehicle Reports (MVR)
    Reviews driving records for violations, license status, or DUI history (especially critical for roles involving vehicle operation).

Why FCRA Background Check Matters

An FCRA background check isn’t just another step in the hiring process, it’s a legal and ethical safeguard for both employers and job seekers.

For employers, following FCRA requirements is essential to:

  1. Mitigate risk: A compliant process helps avoid hiring individuals who may pose safety, security, or financial risks to the company.
  2. Avoid legal consequences: Failing to meet FCRA requirements, such as not providing proper disclosure, failing to obtain written consent, or neglecting to send pre-adverse action notices can open the door to class-action lawsuits and enforcement actions.
  3. Promote fair hiring practices: Ensuring every candidate is screened using the same standards helps reduce unconscious bias and supports more equitable hiring.

For job seekers, FCRA compliant background checks offer critical protections, including:

  1. Transparency and fairness: Hiring decisions based on FCRA background check results must be communicated, allowing applicants to respond and appeal.
  2. The right to be informed: Applicants must receive a clear disclosure that a FCRA background check will be performed and must give written authorization.
  3. The right to dispute: If a FCRA background check report contains errors, outdated data, or mistaken identity, the applicant can challenge the findings and request corrections before any adverse decision is made.

Failing to follow FCRA requirements can result in costly lawsuits, reputational damage, and regulatory fines. In fact, companies like Wells Fargo and Amazon have faced multimillion-dollar class-action lawsuits due to FCRA violations. These cases often stem from procedural failures, such as not providing proper notice before taking adverse action.

In summary, FCRA background check is more than a best practice, it is a compliance requirement and a commitment to responsible hiring. By investing in a trusted FCRA background check vendor like Certn, employers can confidently navigate complex regulations while building a workforce founded on integrity, transparency, and fairness.

What Are the Key FCRA Requirements for Background Checks

The FCRA requirements include a set of specific procedures that must be followed before, during, and after an FCRA background check. Here are some key FCRA requirements that employers must meet:

1. Provide Disclosure and Obtain Written Consent

Before initiating an FCRA background check, employers must inform the candidate in writing that a background check will be conducted. This disclosure must be:

  • Clear and conspicuous
  • In a stand-alone document (not buried in an employment application)
  • Separate from other materials

The employer must also obtain the individual’s written authorization to proceed. Without this step, even a routine background check can be deemed violating the law.

2. Provide Pre-Adverse Action Notice

If the FCRA background check reveals information that may influence the employer to reject a candidate or withdraw a job offer, the employer must issue a pre-adverse action notice. This includes:

  • A copy of the FCRA background check report
  • A summary of rights under the FCRA

The candidate must be given a reasonable amount of time (usually five business days) to dispute the information before a final decision is made.

3. Provide Adverse Action Notice

If the decision is made to reject the candidate based on the FCRA background check, the employer must provide an adverse action notice, which includes:

  • The name and contact information of the CRA
  • A statement that the CRA did not make the decision
  • A notice of the right to dispute the report

Failing to follow this two-step notice process is one of the most common violations of FCRA requirements.

4. Certify Compliance with the CRA

Employers must certify to the CRA that they:

  • Have obtained the proper disclosures and written consent
  • Will not misuse the information in violation of federal or state equal opportunity laws or regulations
  • Will follow FCRA requirements for adverse action

For more details, you can view the Federal Trade Commission’s business guidance on background checks.

FCRA Background Check vs. DIY Screening

It’s important to note that the FCRA background check isn’t the same as do-it-yourself internet searches. While it may be tempting for employers to use search engines or review a candidate’s social media, these methods are not substitutes for an FCRA background check—and relying on them solely can lead to serious risks, including unreliable or outdated information, privacy violations, and potential discrimination claims.

Only CRAs that meet FCRA requirements, like Certn, are authorized to conduct FCRA compliant background checks, which are governed by strict accuracy standards and consumer protection regulations. Choosing these background checks that meet the FCRA requirements over informal methods not only helps employers avoid legal liability but also reflects a commitment to ethical, fair, and professional hiring practices.

Because in hiring, it’s not just about finding information, it’s about finding the right information, the right way.

Collaborative team representing safe, collaborative office due to FCRA background check

How Certn Helps You Stay Compliant

Certn makes FCRA background check compliance simple and secure. Here’s how:

  • Automated consent and disclosure forms: Built-in workflows ensure that every candidate is informed and gives written permission.
  • Custom pre-adverse and adverse action notices: Our platform helps you deliver the right documents at the right time.
  • Dispute handling support: We help investigate and rectify any inaccuracies if any candidate disputes a report.
  • Secure and fast turnaround: Our online platform delivers fast and reliable background checks without cutting corners on compliance.

Certn also offers educational resources to your HR team, so you understand FCRA requirements inside and out. Whether you’re a startup hiring your first employee or a large enterprise managing hundreds of candidates, compliance with FCRA background check procedures is vital. Our services and tools are designed to help you meet FCRA requirements at every step of the background check process. We can protect your organization from legal trouble, promote fairness, and build trust with candidates. By working with a CRA like Certn, you can ensure that your background checks are not only comprehensive but also legally sound.

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