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One Background Report: One Permissible Purpose

What’s your reason for completing background checks? Is it to help you make educated hiring decisions? Or possibly for other business purposes? This distinction is essential because the Fair Credit Reporting Act (FCRA) includes restrictions on why background checks are obtained and used.

A user of a background check report, known as a consumer report under the FCRA, can only request and obtain that report on someone if they have a permissible purpose to do so.

A permissible purpose could be:

      • For employment;
      • For a legitimate business need in connection with a business transaction started by the consumer or to review an account to make sure a consumer still meets the terms of the account;
      • For underwriting insurance;
      • For certain credit transactions;
      • In accordance with the written instructions of the consumer;
      • And more.

But what if you want to use a background check for more than one permissible purpose? What if, for example, you want to use it for a legitimate business need and then for an employment decision? The Federal Trade Commission (FTC) has come out with advice for any person that’s thinking about “double-dipping”: Don’t do it.

Whenever you get a background check from a screening provider, you have to certify that you have a single permissible purpose of doing so and identify what that lawful reason is. This, in turn, helps protect the candidate. When a candidate gets their copy of their background check results from a screening provider, they can see precisely what organization obtained the report and why. Using a background report for one purpose helps you, too. The FTC states, “getting a new consumer report when you have a new purpose helps your business ensure that you obtain the most current information about the consumer.”

Have questions about how this might apply to you? Review the list of FCRA’s permissible purpose options with your legal advisor to identify your permissible purpose.

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