What Is In A Consumer Report Background Check?

When employers talk about running a “background check,” they’re actually referring to what federal law defines as a “consumer report”—a term that often causes confusion, as many mistakenly believe it only pertains to credit information. In reality, consumer reports can include a wide range of data relevant to employment decisions. In today’s competitive job market, understanding what’s included in a consumer report background check, the legal requirements involved, and how to navigate the process is essential for both employers and job seekers.

Understanding Consumer Reports vs. Background Checks

Background checks and consumer reports are essentially the same thing—a point that often causes confusion. This overlap in terminology comes from the Fair Credit Reporting Act (FCRA), the federal law that regulates how consumer information is collected and used. Furthermore, under the FCRA, a consumer report includes any information from a Consumer Reporting Agency bearing on a person’s credit worthiness, credit standing, credit capacity, character, or general reputation.

In practice, this means that when an employer hires a third-party company to gather details, whether it’s credit history, criminal records, or other personal data, that report is considered a consumer report under the FCRA. Furthermore, any consumer reporting company that compiles background information for employment purposes must comply with the FCRA and applicable state laws.

Components of a Consumer Report Background Check

Consumer report background checks can contain various types of information depending on the position being filled and the employer’s requirements. Here’s a breakdown of what might be included:

Criminal Record Information

Criminal history is one of the most common elements of a consumer report background check and may include county court records, state criminal databases, federal criminal records, sex offender registry searches, and global watchlist screenings. These checks help employers assess potential risks, but it’s important to note that under the FCRA, arrest records can only be reported for up to seven years, while convictions can typically be reported indefinitely, depending on state laws.

Verification Checks

These checks confirm the accuracy of information provided by the applicant:

• Employment verification: Confirms previous employment, positions held, and dates of employment
• Education verification: Validates degrees, diplomas, and attendance at educational institutions
• Professional license verification: Confirms valid professional licenses and certifications
• Reference checks: Professional or personal references may be contacted

Verification checks help employers ensure that candidates have the qualifications and experience they claim on their resumes.

Financial Information

Credit information may be included in a consumer report, especially for roles involving financial responsibility, and can cover credit history, credit standing, bankruptcies, and liens or civil judgments. However, many states have enacted laws that limit the use of credit reports in hiring decisions unless the information is directly relevant to the position.

Driving Records

For roles that require driving, a Motor Vehicle Record (MVR) check may be included in the background screening and typically covers license status, traffic violations, DUI/DWI convictions, and accident history to ensure the candidate meets safety and legal standards for the position.

Civil Court Records

Some consumer reports include civil court history:

• Civil litigation: Lawsuits where the applicant was a plaintiff or defendant
• Civil judgments: Monetary judgments against the applicant
• Restraining orders: Court-ordered protection or restraining orders

Specialized Checks

Depending on the industry, additional checks might include:

• Healthcare sanctions: Checks for those in healthcare professions
• Drug testing results: Pre-employment drug screening
• Social media screening: Review of public social media profiles
• Workers’ compensation history: Past workers’ compensation claims (only permissible post-offer)

Legal Requirements for Employers Using Consumer Reports

The FCRA establishes strict requirements for employers who use consumer reports for employment purposes. Furthermore, understanding these obligations is crucial for maintaining compliance and avoiding potential lawsuits.

Before Obtaining a Consumer Report

Before obtaining a consumer report, an employer must provide the applicant or employee with a clear, stand-alone written notice, obtain their written consent, and certify to the Consumer Reporting Agency that they’ve followed these steps, will comply with all FCRA requirements, and will not misuse the information or discriminate based on it.

Taking Adverse Action

If an employer intends to take adverse action, such as rejecting an applicant or terminating an employee, based on a consumer report, they must first provide a pre-adverse action notice, include a copy of the report, supply the “Summary of Your Rights Under the FCRA,” and allow a reasonable period (typically 5–7 business days) for the individual to dispute any inaccuracies.

After Taking Adverse Action

After taking adverse action, the employer must provide an adverse action notice, verbally, in writing, or electronically, along with the name, address, and phone number of the Consumer Reporting Agency, a statement that the CRA did not make the decision, and information about the individual’s right to dispute the report’s accuracy and request a free copy within 60 days.

Investigative Consumer Reports

Investigative consumer reports differ from standard reports by including interviews with acquaintances to gather insights about an individual’s personal characteristics, general reputation, and lifestyle. When using these reports, employers must disclose that an investigative report may be obtained, explain the nature and scope of the investigation, and inform the individual of their right to request further details. Examples include detailed personal reference checks and character evaluations beyond basic employment or education verification.

Consumer Rights Regarding Background Checks

Job applicants and employees have specific rights under the FCRA:

• Right to disclosure: Must be informed that a consumer report may be used
• Right to authorization: Must provide written consent before a report is obtained
• Right to a copy: Can request a copy of their report
• Right to dispute: Can dispute incomplete or inaccurate information
• Right to additional disclosure: Can request additional information about investigative reports
• Right to sue: Can bring private lawsuits for FCRA violations

Additionally, many states have enacted laws providing consumers with additional rights regarding employment background checks.

Best Practices for Employers

For employers who use consumer report background checks, following these best practices can help ensure compliance:

• Develop a consistent policy for background checks, applying the same standards to all applicants for similar positions
• Document all procedures related to background checks
• Train relevant staff on FCRA requirements
• Consider state and local laws, which may be more restrictive than federal regulations
• Conduct individualized assessments when criminal history is uncovered
• Properly secure and dispose of consumer report information
• Regularly review and update background check policies

Conclusion

Consumer report background checks are a crucial part of the hiring process. They enable employers to make informed, responsible decisions while maintaining compliance with legal standards. Understanding what these reports include and the regulations that govern them, such as those enforced by the Federal Trade Commission, helps create a more transparent and fair hiring experience for both employers seeking trustworthy candidates and job seekers protecting their rights and reputations.

If you’re seeking a reliable, compliant, and efficient background screening partner, Sapphire Background Check offers tailored solutions to meet the unique needs of businesses of all sizes. With a strong commitment to accuracy, legal compliance, and data security, we help you make confident hiring decisions. We also uphold the highest standards of privacy and fairness. Contact us today to get started.

FAQs

What comes up on a consumer report?

A consumer report typically includes criminal history, credit information, employment and education verification, driving records, civil court records. Sometimes specialized checks like healthcare sanctions or professional license verifications depending on the job position.

What is not considered a consumer report?

Information gathered directly by an employer without using a Consumer Reporting Agency, internal reference checks from current employees, and public information that an employer researches themselves (like simple Google searches) are not considered consumer reports under the FCRA.

Do I have to agree to a consumer report?

No, you don’t have to agree to a consumer report, but employers can legally withdraw a job offer or terminate your application process if you refuse to authorize one when it’s required for the position. But, being informed about your rights and what the report includes can help you feel more confident when giving consent.

What must be excluded from a consumer report?

Medical information (unless you provide specific consent), bankruptcies older than 10 years, civil suits and judgments older than 7 years, paid tax liens older than 7 years, accounts placed in collection older than 7 years, and most arrests older than 7 years must be excluded from consumer reports.