The Ideal Timing for an Adverse Action Notice According To FCRA Compliance

According to the Fair Credit Reporting Act (FCRA), employers or the "end users of background verification reports" are required to notify the concerned applicants in writing if a decision has been made to follow based on the results from the report. In other words, if an applicant is denied a job or promotion because the results of their background check look suspect, they need to know. There are numerous FCRA claim filings that reveal the importance of these notices.

What do Pre-Adverse Action and Adverse Action Notice mean?

To begin, we must first know the differences between the concepts of pre-adverse action notices and adverse action notices. It can be defined as any negative decision which is based on a request from the applicant like a denial of employment due to the results of a background check or information revealed in the applicant's report. With that in mind, a clearer definition of "pre-adverse" versus "adverse" is obvious. Pre-adverse action notices hence is the notification to the applicant that being considered. Adverse action notices further reveal that a negative decision has been in regards to the applicant.

What should be the timing of an Adverse Action Notice?

After receiving the background verification report, the pre-adverse action must be sent within three consecutive business days, any public holiday can be excluded. The applicant can then have the ability to fight for any allows an applicant 5 business days to review and respond to the pre-adverse action notice. If the applicant does not agree with t an adverse action notice can be sent within five business days from the date of the issue of Failure to complying with the FCRA rules can lead to litigation and penalties on the part of the concerned person.

What Comprises a Pre-Adverse and Adverse Action Notice?

As per the rule of Section 604 of the Fair Credit Reporting Act, no action can be taken until a copy of the background verification report has been provided to the applicant. The report should also contain a written summary which is known as a Pre-Adverse Action Letter, which would detail the potential adverse action apart from specifying the information that led to the decision. Every applicant will be provided with a copy of their rights under the FCRA rules along with the allowed time to dispute the findings of the report.

Section 615 of the FCRA further specifies that a second notice, termed an Adverse Action Letter, must also be provided to the applicant, in writing, as a notification that an adverse action has been taken against him. The applicant must also be informed that the adverse action that has been taken is based on the information found in the background check and they will have had time to fight for any findings as specified in the pre-adverse action notice. The Adverse Action notice hence must include the following highlights:

• Contact information for the reporting agency who prepared the report

• A written confirmation that the consumer reporting agency is not the party taking the adverse action and cannot provide reasons for the adverse action

• A formal notice that the applicant has the right to obtain a second report, free of cost, from that same consumer reporting agency within a time period not to exceed 60 days