The Federal Trade Commission (“FTC”) has sent warning letters to three companies that market, in total, six mobile phone applications (“Apps”) that provide users with background check reports, warning that the Apps may violate the Fair Credit Reporting Act (“FCRA”). Under the FCRA, individuals or organizations that use outside entities (such as the Apps) to procure certain background information on employees or applicants in connection with their employment (or potential employment) must comply with certain notice, authorization, and other rules. In addition, they must receive proper authorization from employees or applicants when background checks are performed. As a best practice, it is crucial to train managers regarding the FCRA and its requirements, develop policies regarding background checking procedures, and make sure that managers are aware of these procedures and that all such policies comply with applicable state credit reporting laws.
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