In the aftermath of Equifax’s data breach, one of the largest breaches in credit history to date, Congress is looking to reform the use of credit information used for employment background checks. After 143 million American consumers were affected by the data breach, Congress proposes a new bill that would result in big changes for the credit reporting agencies and consumers by regulating the use of credit reports for employment purposes.
Limiting Credit Checks in the Hiring Process
The first change requested would be to limit the use of credit checks during the employment hiring process. Congress is looking to only allow an applicant’s credit report to be utilized when required by state and/or federal law or for national security purposes. Furthermore, Congress is looking to ban employers from inquiring about bankruptcies during a job interview and banning questions about bankruptcies in a job application. Congress argues in support of this bill that there is no connection between job performance and an applicant’s credit history. Despite this finding, employers are using credit information more than ever before during the hiring process.
Preventing Potential Data Leaks
While the Fair Credit Reporting Act (“FCRA”) permits employers to conduct background checks on employees after obtaining written permission, Congress argues that it is putting consumers at risk of a data breach when the information is not always necessary. Congress argues that while the laws put in place under the FCRA are important, they fail to prevent data leaks and misuse of the privileged information.
Why Do Some Oppose the New Bill?
Those opposed to the new bill argue to the contrary. Opponents say that employment background checks help eliminate potential employee fraud. Conducting an employment background check can ensure employers are aware of a potential employee’s financial position. It has been found that it is more likely that an employee engaging in fraudulent activity had a poor credit history, was spending outside of their means, and carrying excessive debt.
—
This proposed bill will be before Congress later this month. If you believe you are a victim of a fraudulent background check or you would like more information, contact SmithMarco P.C. for a completely free case review.