Refusal to Hire
Understand an FCRA employment background check, your rights to standalone disclosure and dispute, and how to fix errors when a consumer reporting agency employment report affects hiring. Learn dispute credit report employer steps, adverse action employment notice requirements, how to spot background check errors job seekers face, and whether an employer can use arrest records.
Estimated reading time: 17 minutes
Key Takeaways
An FCRA employment background check involves a third-party consumer report used for hiring and must follow strict Fair Credit Reporting Act rules, including disclosure, authorization, and adverse-action notices.
Applicants have clear rights: to a standalone disclosure and written consent, to receive the report and a Summary of Rights before adverse action, to dispute errors, and to know the CRA’s identity and contact details.
Employers must follow a two-step adverse-action process: pre-adverse notice with a copy of the report and Summary of Rights, a reasonable waiting period, and then a final adverse-action notice with required disclosures.
Common background check errors—misattributed criminal records, outdated or expunged data, mixed credit files, and name/SSN mismatches—can cost you offers; dispute promptly and keep thorough records.
CRAs generally have 30 days to investigate disputes; if they fail to fix inaccuracies, you can escalate to the FTC/CFPB, consider legal action, and seek damages for willful or negligent FCRA violations.
Table of Contents
Introduction
What is an FCRA employment background check?
Applicant rights under the FCRA
Can employer use arrest record?
Employer obligations & adverse action employment notice
Common background check errors job applicants face
How to dispute credit reports and background reports used by employers
Legal protections, timelines, and remedies
Practical checklist for job seekers
What to do if your rights were violated
Conclusion
FAQ
What does “adverse action” mean in hiring?
How long does a CRA have to investigate my dispute?
Can an employer use an arrest that did not lead to conviction?
What should I do first if my job offer was denied for a reporting error?
What if the employer did not send required notices?
Introduction
An FCRA employment background check is a consumer report used by employers to evaluate applicants and must comply with the Fair Credit Reporting Act (FCRA); when a consumer reporting agency employment screen is used, the law imposes extra accuracy, fairness, and privacy safeguards.
Employers rely on background checks to verify identity and credentials, reduce negligent-hiring risk, and support workplace safety. As these checks have become a standard step in hiring, the FCRA’s rules on disclosure, authorization, adverse action, and dispute rights protect both fairness and privacy. For an overview of employer duties, see the Federal Trade Commission’s guidance on using consumer reports in hiring, and review the FTC’s Summary of Your Rights Under the FCRA.
This guide explains your rights, employer obligations (including the adverse action employment notice steps), how to spot and dispute background check errors job applicants commonly face, and what to do if an employer relied on arrest information improperly. You will also learn where to dispute credit report employer decisions, the role of consumer reporting agencies, timelines that matter, and how to escalate complaints when errors persist.
For added context on when employers may review your credit or background information, see our deep dive on whether an employer can run a credit check and how it must be handled.
What is an FCRA employment background check?
An FCRA employment background check is a report prepared by a consumer reporting agency (CRA) that compiles credit, criminal, employment, education, driving, and other public-record or proprietary data for an employer to use in hiring, promotion, or retention decisions. When an employer uses a third-party CRA to gather information, the FCRA applies and sets strict procedures to ensure accuracy and privacy. The FTC’s employer guide explains the basics of these obligations for companies that obtain consumer reports for employment purposes, including disclosure, authorization, and notices when decisions are made based on the report; see what employers should know about checking consumer reports.
The Consumer Financial Protection Bureau (CFPB) also provides practical information on background screening and consumer report accuracy, disputes, and corrections, including credit-file issues; explore the CFPB’s background screening overview and its credit reports and scores tools.
Credit reports: Often used for roles handling money or sensitive financial data to assess financial responsibility. Learn more about when employers consider credit in our guide on employer credit checks and legal limits.
Criminal history and arrest records: Used to evaluate risk and ensure safety-sensitive qualifications; employers must consider relevance and anti-discrimination rules.
Driving records (MVR): Common for transportation or delivery roles to verify license status and driving history.
Education and credential verification: Confirms claimed degrees, licenses, and certifications.
Employment history: Verifies job titles and dates; some vendors conduct reference checks.
Consumer reporting agency employment vendors include the nationwide credit bureaus (Equifax, Experian, TransUnion) and specialty background-screening companies (for example, HireRight or Checkr). CRAs must follow FCRA accuracy and dispute procedures and provide consumers with a means to correct errors. See the FTC’s employer guidance referenced above and the CFPB’s credit reporting resources for details on CRA duties and consumer rights.
Because the FCRA imposes specific steps on both employers and CRAs, understanding the definition and scope of an FCRA employment background check—and how it should be reported and used—helps you spot problems early and protect your opportunities.
Applicant rights under the FCRA
The FCRA gives job applicants and employees several important rights when an employer uses a consumer report for employment:
Right to disclosure: Before ordering a report, the employer must give you a clear, standalone written disclosure that a consumer report may be obtained for employment purposes. The FTC explains the “standalone” rule in its employer guidance, and the requirement appears in the FTC’s Summary of Your Rights.
Right to consent: You must provide written authorization before the employer runs the report.
Right to receive a copy of the report and your Summary of Rights before adverse action: If the employer may deny or withdraw an offer based on your report, they must send you the report and the FCRA Summary of Rights first.
Right to dispute inaccurate or incomplete information: You can notify the CRA that items are inaccurate or incomplete and request a reinvestigation. The CRA must investigate and correct or delete inaccurate items, as outlined in FTC and CFPB resources.
Right to know the CRA’s identity: You are entitled to the name, address, and telephone number of the CRA that supplied the report.
Practical tips to use these rights:
Keep copies of the disclosure and your signed authorization; if a dispute arises, these documents are key.
If you receive a pre-adverse notice, request and review the report immediately, and confirm the employer included the FTC’s Summary of Your Rights Under the FCRA.
Use your dispute rights promptly; if the employer is moving toward a denial, ask them to pause the decision while the CRA investigates.
If the FCRA process is not followed, the decision can be unlawful even if the information would otherwise have been considered. If discrimination is intertwined with the background decision, review our guidance on workplace discrimination laws and how to assert your rights.
Can employer use arrest record?
Yes, but with major limits. Arrests are not convictions, and many state and local laws restrict whether and how employers can consider arrests that did not lead to conviction. Under federal anti-discrimination law, the Equal Employment Opportunity Commission advises that arrests alone usually do not establish criminal conduct; employers should consider the nature and gravity of the offense, the time since the offense or conduct, and the nature of the job, and should avoid policies that disproportionately screen out protected groups. See the EEOC’s guidance on consideration of arrest and conviction records under Title VII.
The FCRA does not itself ban the use of arrest or conviction records, but it regulates how such records are reported and used by employers and CRAs, and it requires notices and an opportunity to dispute errors. Employers should ensure that use of any criminal record is job-related and consistent with business necessity, incorporate an individualized assessment when warranted, and follow the process described in the FTC’s employer guidance on consumer reports. The CFPB’s background screening overview offers additional context on accuracy and disputes.
Examples of safer practices under EEOC guidance include evaluating the nature/severity of conduct, the age of the record, and its relevance to job duties, and giving candidates a chance to provide context. If an arrest entry in your report is wrong, obtain the court disposition or police records and use the dispute steps below to correct the file before a final decision. For broader help with criminal history in hiring, see our guide to combating criminal record job discrimination and asserting your rights. If you were arrested while employed and worry about job risk, review employment consequences after an arrest and employer rights during pending cases.
Employer obligations & adverse action employment notice
Employers that obtain consumer reports from a CRA must follow specific FCRA procedures to stay compliant. The FTC’s employer guide outlines these steps, from the initial disclosure and authorization through pre-adverse and final adverse-action notices; see Using Consumer Reports: What Employers Should Know.
Pre-report requirements:
Standalone disclosure: Provide a plain-language, standalone document stating that a consumer report may be obtained for employment purposes. Sample disclosure (sample only): “We may obtain a consumer report and/or investigative consumer report for employment purposes.” Do not combine this disclosure with an offer letter, liability waivers, or other unrelated terms, as emphasized by the FTC’s guidance.
Written authorization: Obtain the applicant’s signed consent (ink or electronic). Sample authorization (sample only): “I authorize [Employer] to obtain consumer reports about me for employment purposes, including hiring, promotion, or retention decisions.”
Certification to the CRA: The employer must certify to the CRA that it complied with FCRA disclosure and authorization requirements and will follow the adverse-action process. See 15 U.S.C. § 1681b(b) via the Cornell LII FCRA chapter and the FTC’s employer guide.
Adverse-action workflow:
Step 1 — Pre-adverse action notice: Before making a final decision based on the report, send the applicant:
A copy of the consumer report;
A copy of the FTC’s Summary of Your Rights Under the FCRA;
A clear statement that adverse action may be taken unless the applicant disputes or clarifies the report.
Sample pre-adverse text (sample only): “We are considering an employment decision based in whole or in part on information in the enclosed consumer report. Please review it. If you believe any information is inaccurate or incomplete, contact the consumer reporting agency listed on the report to dispute and let us know. We will wait a reasonable period before making a final decision.”
Step 2 — Waiting period: Allow a reasonable time for the applicant to review and dispute the report. While the FCRA does not specify a fixed period, many employers use approximately five business days as a best practice, consistent with FTC guidance and industry practice. Some jurisdictions require longer windows, so check state and local law.
Step 3 — Final adverse-action notice: If the employer proceeds with adverse action (for example, not hiring, withdrawing an offer, or terminating), send a final notice including:
A statement that adverse action was taken based in whole or in part on the report;
The CRA’s name, address, and phone number;
A statement that the CRA did not make the decision and cannot explain the reasons for the decision;
Notice of the applicant’s right to dispute the accuracy or completeness of the report and to obtain an additional free report from the CRA within 60 days.
Sample final adverse-action text (sample only): “This letter is to inform you that we are unable to move forward with your employment based in whole or in part on information contained in a consumer report. The report was provided by [CRA Name, Address, Phone]. The CRA did not make this decision and cannot explain our reasons. You have the right to dispute with the CRA the accuracy or completeness of any information and to obtain an additional free copy of your report within 60 days. Please refer to the enclosed contact information and your Summary of Rights.” See the FTC’s employer guidance and the FTC’s FCRA Summary of Rights.
Timing and the CRA’s role: CRAs must provide the report promptly and, when you dispute, generally have 30 days to investigate (45 days if you provide additional information during the investigation). See FTC dispute guidance and the CFPB’s background screening resources for how reinvestigations work.
Common compliance pitfalls and fixes:
Combining the disclosure with other documents (for example, an application, waiver, or offer letter). Fix: Use a short, standalone disclosure.
Failing to include the report and Summary of Rights with the pre-adverse notice. Fix: Always attach both, as required by the FTC’s guidance.
Taking immediate adverse action without a waiting period. Fix: Provide a reasonable window (often about five business days) for disputes.
Omitting the CRA’s contact information or failing to state that the CRA did not make the decision. Fix: Ensure final notices include all required content.
Because automated tools and AI-driven screening can worsen inaccuracies or bias, employers should audit tools regularly. Workers can learn more about algorithmic risks in our guide to challenging AI hiring discrimination and protecting their rights.
Common background check errors job applicants face
Background check errors are far more common than most applicants realize and can derail a job offer overnight. The CFPB highlights recurring issues with accuracy, reinvestigation, and mixed files in its background screening overview, and the FTC explains how to dispute errors effectively in its dispute guidance.
Frequent errors include:
Misattributed criminal records: Another person with a similar name or a transposed digit in an SSN creates a false match.
Outdated information: Expunged, sealed, or dismissed records continue to appear, or an old case still shows without final disposition.
Inaccurate credit entries: Mixed files, outdated collections, or paid debts reported as unpaid—especially risky for financial roles.
Missing or misreported education or employment details: Inflated titles, wrong dates, or unverified credentials incorrectly reported as discrepancies.
Name/SSN mismatches and identity mix-ups: Hyphenated names, maiden names, or incomplete identifiers cause erroneous merges.
How errors cause adverse action: A mistaken felony can trigger automatic rejection; an erroneous delinquency may eliminate candidates for fiduciary roles; and inaccuracies may have disproportionate impact on certain groups, raising discrimination concerns. If an employer indicates an adverse decision is likely, they must first deliver the report and your Summary of Rights and give you a chance to dispute. See the FTC’s employer guidance.
Immediate steps if you find an error (act quickly):
Request a free copy of the report if adverse action is contemplated; the employer must provide it with the pre-adverse notice. For credit files, also use AnnualCreditReport.com to review your credit reports.
Gather documents: court dispositions, expungement orders, proof of payment, government ID, and any correspondence.
File a dispute in writing with the CRA and include supporting documents. Follow the FTC’s guidance on disputing errors in credit reports and apply the same principles to background screening reports.
Notify the employer in writing that you have disputed the report; ask them to pause their decision until the reinvestigation is complete.
Follow up with both the CRA and employer; create a timeline of all communications and keep confirmations and portal screenshots.
When the CRA corrects the report, ask for written confirmation and request they send the corrected report to the employer that used the original report.
If issues persist, file complaints with the FTC at ReportFraud.ftc.gov and with the CFPB at its consumer complaint portal.
Consider consulting a lawyer if the employer violates your rights or the CRA fails to correct errors; damages may be available under the FCRA.
If your employer also monitors communications or uses tracking tools, know your boundaries and protections—see our overview of workplace privacy rights and employer monitoring.
How to dispute credit reports and background reports used by employers
Follow this stepwise process to dispute credit and background report errors effectively when an employer is involved.
Step A — Obtain the exact report and identify precise errors:
If the employer may take adverse action, they must give you the report and your FCRA Summary of Rights before a final decision. Review the FTC’s error-dispute guide.
For credit files, request fresh copies via AnnualCreditReport.com. If a background screening vendor prepared an employment report, request it directly from that CRA.
Step B — Draft and send a written dispute to the CRA:
Use certified mail when possible, or the CRA’s online portal; keep copies of everything you submit.
Sample CRA dispute paragraph (sample only): “I dispute the following items on my employment background/credit report because they are inaccurate or incomplete: [list each item with account/case numbers]. Enclosed are copies of documents supporting my position, including [court disposition/proof of payment/government ID]. Please reinvestigate and correct or delete these items and send me written confirmation of the results.”
Helpful subject lines: “FCRA Dispute – Employment Background Report” or “FCRA Dispute – Credit Report Itemization.”
Attach: court dispositions, expungement orders, payment receipts, driver’s record, ID, SSN trace or proof of address, and employer correspondence.
Step C — CRA investigation timeline and expectations:
CRAs generally have 30 days to investigate disputes (extended to 45 days if you provide additional information during the investigation). See FTC and CFPB dispute process explanations in the FTC’s dispute guidance and the CFPB’s credit reporting resources.
After the reinvestigation, the CRA must send you the results in writing and a free copy of the corrected report if a change was made.
Step D — Notify the employer and request a pause:
Sample employer notification (sample only): “I received your pre-adverse notice and have filed a formal dispute with the CRA regarding inaccuracies in the report. I am attaching supporting documents and ask that you pause any final adverse action until the reinvestigation is complete.”
The FTC’s employer guidance emphasizes waiting a reasonable time so applicants can dispute inaccuracies; see the FTC’s pre-adverse and adverse-action steps.
Step E — If the CRA corrects the file:
Request written proof of correction and ask the CRA to send the corrected report to the employer that used the original report.
Follow up with the employer to confirm they received the update and will reconsider your application.
Step F — If the CRA fails to act or refuses correction:
Escalate complaints to the FTC at ReportFraud.ftc.gov and the CFPB’s complaint portal.
Consider legal options for willful or negligent FCRA violations, including statutory damages in certain cases. Review the FCRA statutory text via Cornell LII.
Additional sample text (use with care; review with counsel if you are an employer):
CRA follow-up request for employer notification (sample only): “Please transmit the corrected report and a notice of correction to [Employer] because they used the prior report in making an employment decision. Kindly confirm in writing when this has been sent.”
If your dispute intersects with criminal-history decisions or automated screening tools, consult our resources on criminal record discrimination in hiring and AI hiring discrimination risks and remedies.
Legal protections, timelines, and remedies
Under the FCRA, CRAs generally must complete reinvestigations within 30 days (or 45 days with additional information). You are entitled to written results and, if a change is made, a free copy of the corrected report. See the FTC’s instructions for disputing report errors and the CFPB’s background screening overview.
Potential remedies for applicants include:
Correction or removal of inaccurate data and delivery of an updated report to you (and, upon request, to the employer).
An additional free copy of your corrected report when changes occur after a dispute.
Civil remedies if the employer or CRA violated the FCRA, including statutory damages for willful violations and actual damages for negligent violations, plus potential attorney’s fees and costs. Review high-level rights in the FTC’s Summary of Your Rights and refer to the statute via Cornell LII.
Deadlines matter. The FCRA includes statutes of limitations for bringing claims, and state laws may add further protections (like limits on credit checks or ban-the-box rules). Because timelines and remedies vary by jurisdiction and facts, consider speaking with an employment or consumer-rights attorney about your specific situation.
Practical checklist for job seekers
Pull your consumer and credit reports early and fix errors before applying; use AnnualCreditReport.com for credit files.
Keep copies of any standalone disclosure and your signed authorization.
Confirm the disclosure is not buried in an application or offer; it should be a standalone document as the FTC’s employer guidance explains.
If given a conditional offer, ask whether it is contingent on a background check and request a copy of the report if adverse action is considered.
On receiving a pre-adverse notice, read the report immediately, note each error, and gather documents to dispute.
File disputes with the CRA within 30 days, and notify the employer you have disputed to pause any final decision.
Ask the CRA to forward corrections to any employer that used the report.
Keep a written log of dates, calls, emails, and portal submissions.
If rights are ignored, file complaints with the FTC and CFPB: use ReportFraud.ftc.gov and the CFPB complaint portal.
Know your local rules (ban-the-box, credit-check limits) and EEOC guidance on arrest/conviction records; see Title VII guidance on criminal records. Keep the FTC’s FCRA Summary of Rights handy, and check the CFPB’s consumer resources.
What to do if your rights were violated
If the employer failed to provide a standalone disclosure, did not obtain written authorization, skipped the pre-adverse notice, or refused to wait a reasonable period for a dispute, document everything and escalate.
File an FTC complaint: Use ReportFraud.ftc.gov to report FCRA violations and unfair practices.
File a CFPB complaint: Submit your background-screening or credit-report dispute at the CFPB’s complaint portal.
Contact your state Attorney General: Most AG websites have consumer protection pages to report unfair or deceptive practices and privacy violations.
Consult an attorney if you suffered a wrongful denial of employment, willful FCRA violations, or significant financial/emotional harm. A lawyer can evaluate remedies and statutes of limitations, and may pursue damages for negligent or willful noncompliance.
For additional background on employers’ use of credit and background information, review our explainer on when and how employers can run credit checks, and consider privacy implications in our guide to employee data access and correction rights.
Conclusion
Understanding FCRA employment background check rules—and how the adverse action employment notice process and dispute rights work—helps you protect offers and correct errors before they cost you a job. Be proactive: review your reports early, keep your documents organized, dispute inaccuracies fast, and ask employers to pause decisions while the CRA investigates. If problems persist, escalate to the FTC/CFPB and consider legal advice to enforce your rights and dispute credit report employer decisions that rely on inaccurate data.
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FAQ
What does “adverse action” mean in hiring?
Adverse action is any negative decision based on your consumer report, such as denying employment, rescinding a conditional offer, or termination. Before a final decision, the employer must send a pre-adverse notice with your report and the FTC’s FCRA Summary of Rights, wait a reasonable period for you to dispute, and then, if still proceeding, send a final adverse-action notice with required disclosures per the FTC’s employer guidance.
How long does a CRA have to investigate my dispute?
Generally 30 days, extended to 45 days if you provide additional information during the investigation. After reinvestigation, the CRA must send you written results and a free copy of your corrected report if changes were made. See the FTC’s dispute guidance and the CFPB’s background screening overview.
Can an employer use an arrest that did not lead to conviction?
Employers should be cautious. The EEOC advises that arrests are not proof of criminal conduct and recommends an individualized assessment considering the offense’s nature/severity, time elapsed, and job relevance; see the EEOC’s Title VII guidance. The FCRA regulates reporting and requires notices and a chance to dispute. State/local laws may impose stricter limits.
What should I do first if my job offer was denied for a reporting error?
Act immediately: request and review the exact report, itemize the errors, and file a written dispute with the CRA following the FTC’s dispute instructions. Notify the employer you’ve disputed and ask them to pause a final decision. If corrected, ask the CRA to send the updated report to the employer. Escalate persistent issues with the FTC at ReportFraud.ftc.gov and the CFPB’s complaint portal.
What if the employer did not send required notices?
Document the omission (for example, missing pre-adverse or final adverse-action notices, absent Summary of Rights, or no waiting period) and escalate. File complaints with the FTC and CFPB, and consider speaking with counsel about potential remedies under the FCRA, including statutory damages in willful-violation cases; see the statute via Cornell LII and the FTC’s employer compliance guide.
