A Deeper Look at Investigative Consumer Reports

Employers hoping to learn detailed information about their candidates may want to read on. You may know the Fair Credit Reporting Act (FCRA) definition of a “Consumer Report.” But are you familiar with the FCRA’s definition of “Investigative Consumer Reports” and the specific requirements that go along with them?

The FCRA defines an Investigative Consumer Report as:

a Consumer Report (or any part within a Consumer Report), with some exceptions, in which information on a consumer’s character, general reputation, personal characteristics, or mode of living is obtained through personal interviews with neighbors, friends, or associates of the consumer, or any others who may be acquainted with the consumer or who may have knowledge about such items.

Want to dig deeper about what is (and what is not) an Investigative Consumer Report? Looking at regulatory interpretations of the FCRA can help.

In 2011, the Federal Trade Commission (FTC) released a report containing a summary of FCRA interpretations. The summary, “40 Years of Experience with the Fair Credit Reporting Act” (the “40 Years Report”), can be a practical tool to help provide guidance and other interpretations of the FCRA. While the summary can be helpful, the FTC does caution that “The Staff Summary does not have the force or effect of regulations or statutory provisions” and that “These summary statements of the law… should not be used as a substitute for the statutory text.”

“Personal Interviews” Inform Investigative Consumer Reports

So, what does the FTC’s summary say about Investigative Consumer Reports?  The FTC’s interpretation of the definition of an Investigative Consumer Report notes that “An ‘Investigative Consumer Report’ is a type of ‘Consumer Report’ that includes information obtained through personal interviews with the consumer’s neighbors, friends, associates, or others. If communication does not fall within the definition of ‘Consumer Report,’ however, it will not be an ‘Investigative Consumer Report.’”

What’s critical to the definition of an Investigative Consumer Report is that information must be obtained through a “personal interview.”

According to the FTC, “’Personal interviews’ include interviews with a neighbor, friend, or associate of the consumer conducted by mail, telephone or electronic means, as well as in person.” This information all has something in common – it’s an interview with a third person. The term may lead employers to believe that any interview fits this category. The FTC notes that if the report contains only information obtained from the candidate, it would not be considered an Investigative Consumer Report. The information was not collected through personal interviews with third persons.

Employers may wonder if the definition includes checking a candidate’s references or job history. The FTC provides guidance on this, too.  According to the FTC’s interpretation, a discussion between a Consumer Reporting Agency and a candidate’s previous employer to verify facts reported on an employment application (such as periods of employment, job titles, and salary information) is not an interview and is not an Investigative Consumer Report. The FTC does clarify that obtaining information from a former employer beyond “fact-checking” could constitute an interview and be considered an Investigative Consumer Report. This could include, but is not limited to, asking a candidate’s former employer about:

• Discipline actions against the candidate
• Termination reasons
• Evaluations of the candidate’s job performance

Keep in mind that a report that contains both information obtained from personal interviews and information not obtained through other, non-interview background checks could still be considered an Investigative Consumer Report. The FTC notes:

“A report that is obtained by personal interviews with the consumer’s neighbors, friends, associates or others does not lose its status as an ‘investigative consumer report’ if it also contains non-investigative information (such as a credit report), because the definition includes reports, a ‘portion’ of which are investigative reports.”

Unique Disclosure Requirements for Investigative Consumer Reports

Employers that obtain Investigative Consumer Reports must provide their candidates with a specific disclosure to get the report. The disclosure must:

• Clearly and accurately disclose to the employee or applicant in writing that it may obtain an Investigative Consumer Report, including information from the referenced personal interviews as to their character, general reputation, personal characteristics, and mode of living.
• Be provided to the candidate within three days of requesting the report.
• Include a statement that the candidate has the right to request additional disclosures and a written summary of rights, as provided by the FCRA.

It may be tempting for employers to combine all disclosures into one. You may want to think again if this is something you are considering. Verified Credentials recently discussed litigation involving one employer that took this route.

The FTC detailed additional interpretations of the FCRA in the 40 Years Report. Check out the resource for disclosure and delivery requirements.

We offer sample disclosures, including a sample investigative consumer report disclosure, to clients in their account’s Resource Library to reference as they create their disclosure documents. Employers should work with their legal counsel to determine if their disclosures meet their specific requirements.