If a background check reported a record incorrectly, the Fair Credit Reporting Act requires a consumer reporting agency that prepares a report to follow reasonable procedures to assure maximum possible accuracy and, when a consumer disputes an item, generally to reinvestigate within 30 days. It also requires an employer or other user that takes adverse action based on a report to give certain notices, and it makes remedies potentially available when those duties are not met. An inaccurate background check attorney handles claims under this law.
A background check error can surface as a withdrawn job offer, a promotion that went to someone else, or a rental application that came back denied. The report may show a criminal record that belongs to someone else, a case a court sealed, or a charge listed as something worse than it was. It is hard to dispute a report a person has never seen.
This page explains how the federal Fair Credit Reporting Act treats background check companies, the kinds of errors that can appear, the dispute process, the notices employers owe, and what the statute makes potentially available when its rules are not followed.
What the FCRA Requires of Background Check Companies
The Fair Credit Reporting Act (FCRA) is a federal law that applies across the United States. A background check prepared by a consumer reporting agency is a "consumer report" when it meets the definition in 15 U.S.C. § 1681a(d), subject to the exclusions in that section: any written, oral or other communication of information by a consumer reporting agency bearing on a consumer's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics or mode of living that is used or expected to be used or collected, in whole or in part, as a factor in establishing the consumer's eligibility for credit or insurance to be used primarily for personal, family or household purposes, for employment purposes, or for another purpose authorized under 15 U.S.C. § 1681b. Under 15 U.S.C. § 1681a(f), a "consumer reporting agency" is any person that, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties, and that uses a means or facility of interstate commerce to prepare or furnish them.
The CFPB explains that hundreds of companies provide employment background checks and qualify as consumer reporting agencies. It also notes that specialty reporting companies may collect information such as employment and tenant history.
Three groups carry duties under the FCRA:
- Consumer reporting agencies. When an agency prepares a consumer report, 15 U.S.C. § 1681e(b) requires it to follow reasonable procedures to assure maximum possible accuracy of the information about the person the report concerns.
- Furnishers. A furnisher is anyone who supplies information to a consumer reporting agency. Under 15 U.S.C. § 1681s-2(a)(1), a furnisher may not furnish information relating to a consumer to a consumer reporting agency if it knows or has reasonable cause to believe the information is inaccurate, which the statute defines as having specific knowledge, other than solely allegations by the consumer, that would cause a reasonable person to have substantial doubts about its accuracy. The statute also bars furnishing information that the consumer has notified the furnisher, at the address the furnisher specifies, is inaccurate when the information is in fact inaccurate.
- Users. Employers and landlords who rely on a report are users. An "adverse action" is a decision against the consumer, such as not hiring them. A user who takes adverse action based on a report owes the consumer the notices described below.
The broader Fair Credit Reporting Act covers far more than background checks. These are the duties that matter most here.
Common Types of Background Check Errors
Background check errors can take several forms. Whether any one of them violates the FCRA depends on its facts, including what procedures the company followed.
- Mixed file. A mixed file is a report that attaches another person's records to yours. It can happen when the two people have similar names or dates of birth. The accuracy standard in 15 U.S.C. § 1681e(b) is the rule this kind of error is measured against. - Identity errors. These include a wrong name spelling, a wrong date of birth, or a variant of a Social Security number that pulls in the wrong records. - Expunged or sealed records still appearing. A court order may have closed a case that a report still shows as open. - Outdated information. Under 15 U.S.C. § 1681c(a), except as 15 U.S.C. § 1681c(b) authorizes, a consumer reporting agency generally may not make a consumer report containing items that include the following: - civil suits, civil judgments and records of arrest older than seven years, or older than the governing statute of limitations if that period is longer; - other adverse items older than seven years.
The limit on other adverse items does not reach records of convictions of crimes. Under 15 U.S.C. § 1681c(b), paragraphs (1) through (5) of 15 U.S.C. § 1681c(a) do not apply to a consumer credit report used in connection with a credit transaction involving a principal amount of $150,000 or more, the underwriting of life insurance involving a face amount of $150,000 or more, or the employment of an individual at an annual salary that equals, or may reasonably be expected to equal, $75,000 or more. - Misclassified offenses. A misdemeanor may be reported as a felony, or a dismissed charge reported as a conviction. - Duplicate entries. One case may be listed several times, so the record looks longer than it is.
The Dispute Process: What the FCRA Gives a Consumer
A consumer may dispute the completeness or accuracy of any item in their file directly with the consumer reporting agency. Under 15 U.S.C. § 1681i(a)(1), the agency must then conduct a reasonable reinvestigation free of charge, although under § 1681i(a)(3) it may terminate the reinvestigation if it reasonably determines the dispute is frivolous or irrelevant. A "reinvestigation" is the agency's review to decide whether the disputed information is inaccurate. When it is done, the agency must either record the current status of the information or delete the item. The agency must finish within 30 days of receiving the dispute.
That 30-day period may be extended by up to 15 more days if the consumer sends relevant information during the first 30 days. The extension does not apply if, during the 30 days, the information is found to be inaccurate or incomplete, or the agency determines it cannot be verified. The statute also contains other exceptions and conditions.
Within five business days of receiving the dispute, 15 U.S.C. § 1681i(a)(2) requires the agency to notify whoever furnished the disputed item and pass along all relevant information from the consumer. After that notice, 15 U.S.C. § 1681s-2(b) requires the furnisher to:
- investigate and review the information it receives;
- report the results to the agency;
- report any inaccuracy it finds to the nationwide agencies it reported to;
- promptly modify, delete or block an item that is inaccurate, incomplete or cannot be verified.
The CFPB's summary of FCRA rights says inaccurate, incomplete or unverifiable information must be removed or corrected, usually within 30 days. It also says an agency must investigate unless the dispute is frivolous, and may continue to report information it has verified as accurate.
A consumer may also notify a furnisher directly, at the address the furnisher specifies, that specific information is inaccurate, as 15 U.S.C. § 1681s-2(a)(1)(B) describes. The FTC adds that a consumer may include supporting documentation with a dispute and may ask the company to send a corrected report to the employer. Disputes over a credit report follow the same rules, as explained on the credit report error attorney page.
Adverse Action Notices and Employment Background Checks
An employer that uses a background reporting company must follow rules at every stage, from before the report is ordered to after any decision against the applicant or worker.
Before the report is ordered. Under 15 U.S.C. § 1681b(b)(2), the employer generally must give a clear written disclosure, in a document that consists solely of that disclosure, saying a report may be obtained. The person must also authorize the report in writing. The statute sets a different rule, in 15 U.S.C. § 1681b(b)(2)(B)-(C), for applicants to certain transportation positions (those over which the Secretary of Transportation can set qualifications and maximum hours of service, or that are subject to safety regulation by a State transportation agency) whose only contact with the employer has been by mail, telephone, computer or similar means.
Before deciding against the person. Under 15 U.S.C. § 1681b(b)(3)(A), in using a consumer report for employment purposes, a person intending to take adverse action based in whole or in part on the report must first give the consumer a copy of the report and a written description of the consumer's rights under the FCRA. Different notice rules apply under § 1681b(b)(3)(B) to the transportation applicants described above, and § 1681b(b)(4) sets out an exception for certain national security investigations by federal agencies. In the employment setting, "adverse action" includes a denial of employment or any other decision for employment purposes that adversely affects any current or prospective employee.
After the decision. Under 15 U.S.C. § 1681m(a), any person who takes adverse action based in whole or in part on a consumer report must give the consumer:
- notice of the adverse action;
- disclosure of any numerical credit score used, along with related score information;
- the name, address and telephone number of the agency that supplied the report;
- a statement that the agency did not make the decision and cannot explain the specific reasons for it;
- notice of the right to a free copy of the report from that agency, including the 60-day period for asking for it;
- notice of the right to dispute the report's accuracy or completeness with that agency.
Under 15 U.S.C. § 1681m(c), no person is held liable for a violation of that section if the person shows by a preponderance of the evidence that, at the time of the alleged violation, it maintained reasonable procedures to assure compliance with the section.
The CFPB says that many employers now use third-party consumer reports to make employment decisions about current workers as well as applicants.
What the FCRA Makes Potentially Available When These Rules Are Violated
The FCRA sets its remedies by the kind of noncompliance, and each remedy depends on what a court finds. The remedies also differ from those in the debt-collection and calls laws, which are compared on the consumer rights remedies page.
Willful noncompliance. Under 15 U.S.C. § 1681n(a), a person who willfully fails to comply with an FCRA requirement with respect to a consumer is liable to that consumer for the sum of:
- actual damages sustained as a result of the failure, or damages of not less than $100 and not more than $1,000 (for a natural person who obtains a consumer report under false pretenses or knowingly without a permissible purpose, § 1681n(a)(1)(B) sets actual damages or $1,000, whichever is greater);
- punitive damages, in whatever amount the court may allow;
- in a successful action, the costs of the action and reasonable attorney's fees as determined by the court.
Negligent noncompliance. Under 15 U.S.C. § 1681o, a person who is negligent in failing to comply is liable for any actual damages sustained as a result of the failure. In a successful action, the person is also liable for costs and reasonable attorney's fees.
Under 15 U.S.C. § 1681n(c) and § 1681o(b), on a finding by the court that an unsuccessful pleading, motion, or other paper was filed in bad faith or for purposes of harassment, the court shall award the prevailing party attorney's fees reasonable in relation to the work expended in responding to it. Under 15 U.S.C. § 1681s-2(c), sections 1681n and 1681o do not apply to a violation of the furnisher accuracy duty in § 1681s-2(a), which § 1681s-2(d) provides is enforced exclusively by the Federal agencies and officials and the State officials identified in 15 U.S.C. § 1681s. Whether anything is available in a particular situation depends on its facts: whether a requirement was violated, whether the failure was willful or negligent, and what harm can be shown to have resulted.
Filing deadline. Under 15 U.S.C. § 1681p, an action must be brought by the earlier of two dates:
- two years after the plaintiff discovers the violation; or
- five years after the violation occurred.
The stages of a case are outlined in how consumer lawsuits work.
What Federal Consumer Rights Does — and Does Not — Cover
Federal Consumer Rights is a website that provides information about consumer-protection law and facilitates inquiries. It is not a law firm and represents no one.
This site covers:
- background check and tenant screening report errors under the FCRA;
- credit report disputes;
- debt collection;
- unwanted calls and texts;
- data breaches and identity theft.
These topics are introduced together on the consumer rights attorney page.
This page does not cover criminal defense, petitions to expunge or seal a record, immigration consequences of a background check, or employment discrimination claims under Title VII. It also does not state any state's own rules. The FTC notes that laws in a person's city or state may affect whether or when employers can ask about criminal or credit history. State law may add protections, and it differs from state to state.
A request sent through this site may be passed to attorneys who decide for themselves whether to respond.
How to Submit an Inquiry
This page does not address whether to accept a job offer, how to answer a criminal-history question, or court proceedings to clear a record.
A consumer rights case review about a background check error can be requested through Federal Consumer Rights.
