The Consumer Financial Protection Bureau (CFPB) sent out a message this week warning credit reporting companies about including outdated information, particularly people’s criminal records, when creating background check reports.

The CFPB issued the advisory opinions on Thursday, specifically eyeing the credit reporting industry dominated by Experian Plc, Equifax Inc., and TransUnion.

The first message was a reminder to consumer credit reporting companies to utilize a seven-year time limit for criminal charges from the time of the initial charge if a person is found not guilty.

The second opinion said credit reporting companies should provide consumers with complete credit files, to include adverse reports and entities furnishing the data for the reports, even if the consumer doesn’t ask for all of the files.

The CFPB opinions, while highlighting agency concerns, can be used by examiners when checking for compliance. The advisory opinions also come as the CFPB is considering an extensive update of the Fair Credit Reporting Act in 2024, which is expected to set new requirements for consumer disputes.

Background Checks

Employers and landlords use background checks to review job candidates and housing applicants. Consumers can be harmed when those background reports contain old or inaccurate information. As stated by the CFPB, Black and Hispanic applicants are particularly at risk for mistakes in credit and background reports.

Over the past few years, the CFPB and the Federal Trade Commission (FTC) have taken several actions to decrease the problems in background checks.

The FTC has actively sued background-checking firms to ensure they’re covered by the Fair Credit Reporting Act.

The CFPB issued an additional message in 2021 warning that screening companies are in violation of federal credit reporting laws if they only use name-matching tools to identify applicants without using other verifications, to include Social Security numbers.

The CFPB has stated it will team with the FTC to monitor background-screening companies in the U.S.

Ensuring accuracy is critical at GroupOne Background Screening Services. We believe it’s important to be aware of the sources of information because there are no shortcuts or alternatives. The most recent and formal sources should always be utilized. Please do not hesitate to contact us should you have questions.