When you use Verified First to conduct background screening, you take on specific legal responsibilities under the Fair Credit Reporting Act (FCRA) and applicable state laws. This article explains what those responsibilities are, when they apply, and what steps you must take before, during, and after the screening process.

Important: Verified First is not your legal counsel and cannot advise you on your specific compliance obligations. We strongly recommend that you work with qualified legal counsel to develop your employment screening policies and procedures. The information in this article is provided as general educational guidance only.
 

1. What You Certified When You Signed Your Agreement

Before receiving any consumer reports from Verified First, you executed a Master Service Agreement (MSA) in which you certified the following:

1. Permissible purpose: You have a permissible purpose for obtaining the report — typically employment screening
2. Disclosure and authorization: You will provide the applicant or employee with the required disclosure and authorization forms
3. Adverse action compliance: You will follow the FCRA's two-step adverse action process if you intend to take adverse action based on information in a consumer report.
4. Confidentiality: You will keep consumer information confidential and destroy it securely when no longer needed.
5. Legal compliance: You will use consumer information in compliance with all applicable laws and regulations, including state laws that may impose additional requirements beyond the FCRA 

These certifications are not formalities. They are legal requirements under 15 U.S.C. § 1681b of the FCRA, and violations can expose your organization to regulatory action and civil litigation.
 

2. Before You Order a Background Check: Disclosure and Authorization

Before ordering any consumer report for employment purposes, the FCRA requires you to:

1. Give a standalone written disclosure: Provide the applicant or employee with a 

The disclosure must be a standalone document — it cannot be buried in an employment application or combined with other materials (with limited exceptions). It must clearly state that a consumer report may be obtained for employment purposes.

2. Obtain written authorization: Obtain the applicant or employee's written authorization before requesting the report.

State requirements vary significantly. California, New York, Washington, and many other states impose requirements beyond the federal FCRA baseline — including specific language, timing requirements, and separate acknowledgment forms. Consult your legal counsel to ensure your disclosure and authorization process is compliant in every state where you hire.

Verified First provides sample disclosure and authorization forms as a starting point. These samples are not legal advice and may need to be adapted for your specific jurisdiction(s). Your legal counsel should review any forms you use.
 

3. If You Are Considering Not Hiring Based on a Report: The Adverse Action Process

The adverse action process is one of the most frequently misunderstood — and most litigated — areas of FCRA compliance. If you are considering taking any adverse employment action based in whole or in part on information in a consumer report, you must follow a two-step process.

Step 1 — Pre-Adverse Action Notice

Before you make a final decision, you must provide the applicant or employee with:

• A copy of the consumer report
• A copy of A Summary of Your Rights Under the Fair Credit Reporting Act
• Notice that you are considering taking adverse action based on information in the report

You must then allow the individual a reasonable amount of time to review the report and dispute any inaccurate information before making a final decision. The FTC has informally indicated that five business days is generally considered a reasonable minimum waiting period, though some states require longer.

Why the waiting period matters: Consumer reports occasionally contain errors. The pre-adverse action process gives the applicant an opportunity to dispute inaccurate information before it affects their employment. Skipping this step — or shortening the window — is a common source of FCRA claims.

Step 2 — Final Adverse Action Notice

If you proceed with the adverse employment decision after the waiting period, you must notify the individual with:

• Notice that adverse action was taken
• The name, address, and toll-free phone number of Verified First as the consumer reporting agency that furnished the report
• A statement that Verified First did not make the employment decision and cannot tell the individual why adverse action was taken
• Notice of the individual's right to obtain a free copy of their consumer report from Verified First within 60 days
• Notice of the individual's right to dispute the accuracy or completeness of any information in the report

Important: State and local laws may impose additional adverse action requirements, including specific notice language, shorter or longer waiting periods, or individualized assessment obligations. Consult your legal counsel to ensure your process is compliant in your specific jurisdiction(s).
 

4. State-Specific Considerations

The FCRA establishes a national floor for background screening compliance. Many states impose additional requirements on top of the federal baseline. The following is a non-exhaustive summary of areas where state law commonly adds requirements:

This table is a general reference only and is not comprehensive. Laws change frequently. Always consult your legal counsel for jurisdiction-specific guidance.
 

5. Protecting and Disposing of Consumer Report Information

Under the FCRA and the FTC Disposal Rule (16 CFR Part 682), you are required to properly protect and dispose of consumer report information:

• Limit access to consumer report information to individuals who have a legitimate need for it in connection with an authorized employment decision
• Store consumer reports securely and do not retain them longer than necessary
• When you no longer need the information, destroy it in a manner that renders it unreadable and unrecoverable — this means shredding paper records and permanently deleting electronic files
• Do not share consumer report information with third parties who do not have a permissible purpose

Improper disposal or unauthorized disclosure of consumer report information is a violation of federal law and can expose your organization to regulatory penalties and civil claims.
 

6. Questions About Compliance? Here’s What Verified First Can Help With

Verified First can help you understand the background screening process, explain our products and reports, and provide sample forms as educational resources. There are, however, limits to what we can tell you:

If you have specific questions about your compliance obligations, please consult your legal counsel. Verified First is always happy to answer questions about our products, our processes, and what information we provide — but we are not a substitute for qualified legal advice.
 

7. Key Resources

This document is provided for general educational purposes only. It does not constitute legal advice and should not be relied upon as such. Laws and regulations governing background screening and employment vary by jurisdiction and are subject to change. Verified First is a Consumer Reporting Agency under the FCRA. It is not your legal counsel. Please consult qualified legal counsel to ensure your employment screening program is compliant with all applicable federal, state, and local laws.