Adverse Action Process

Adverse Action Process

If an employer denies a job applicant, terminates an employee, rescinds a job offer or denies a promotion based on the results of a background check, it is considered and adverse action.
Under federal law there are required steps that must be followed in order to be in compliance with the Fair Credit Reporting Act (FCRA).
There are two notice requirements under the FCRA

I. The Pre-Adverse Action Letter

A Pre-Adverse Action Letter must be sent before the adverse action is taken. In other words, if an employer feels that that the information contained in a background check report may impact the hiring decision, the employer must send the Pre-Adverse Action letter. The purpose of the letter is to give the applicant an opportunity to dispute the accuracy of what was reported. Section 604 of the FCRA requires that before taking any adverse action employers provide to the consumer with the letter

  •     a copy of the background check report
  •     a summary of consumer’s rights under the FCRA

II. The Adverse Action Letter

If the applicant does not dispute the report and the employer decides to take an adverse action (not hire the applicant), a second letter must be sent. In the Adverse Action Letter, the employer must notify the consumer that an adverse action has been taken based on a consumer report and disclose the following:

  •     The name, address and phone number of the Consumer Reporting Agency that furnished the report
  •     A statement that the Consumer Reporting Agency did not decide to take the adverse action and is unable to provide the consumer with specific reasons for the action
  •     A notice of a consumer’s rights to obtain another free copy of his or her report from the Consumer Reporting Agency within 60 days.
  •     A notice that the individual has the right to dispute the accuracy or completeness of any information in the report.”  FCRA §615


How long should I wait after sending the Pre-Adverse Action letter before I send the Adverse Action letter?

The FCRA does not provide an exact time frame however, the FTC stated in an opinion letter that employers should keep in mind that the purpose of the provision is to allow consumers to discuss the report with employers before an adverse action is taken (FTC Opinion Letter, Lewis, June 11, 1998). The adverse action letters provide the consumer protection giving them an opportunity to clear up any potential errors on a report. Congress has ruled that 5 business days is a reasonable time period to wait after the pre-adverse action letter before taking adverse action (H.R. Representatives No. 103-486, 1994).

How should I send the letters?

While there is no required method, sending the letter by mail with return receipt or getting the applicant to sign for it, provides evidence that they received it. If you have the ability to send the letter by email with return receipt it can also show that it was received and opened.

Are These Letters Required?

The FCRA has penalties including punitive damages and actual damages for failure to comply with the adverse action provisions.
As compliance is fairly simple, employers should incorporate the adverse action process into their employment screening policies.

Can I see Sample Letters?

You can view or download sample adverse action letters at the following URL:

1.    This is a sample background check report (this is not a real person).
2.    This is a sample Pre-Adverse Action Letter
3.    This is a sample Adverse Action Letter extlink

How can U.S. Information Search Help?

1. When you order a background check, enter the applicant’s address and email address in their profile. Once viewing the completed report, you can send a Pre-Adverse Action Letter, a copy of their report, and a copy of their Rights Under the Fair Credit Reporting Act by simply choosing and clicking one button. Another button can be clicked when you are ready to send the Adverse Action Letter, a copy of their report, and a copy of their Rights Under the Fair Credit Reporting Act. If the Pre-Adverse or Adverse Action Letters option is not on your ordering menu, contact customer service to have it added.

2. If you did not previously enter their email address (needs to be added during the initial profile creation) or you do not want to email the report, one button will give you the ability to compile all the documents for printing.

3. If you would like U.S. Information Search to send these reports on your behalf and you would like to obtain an email, read receipt or physical mail receipt, please discuss these options with your account representative.

U.S. Information Search is a national background & substance abuse screening company located in Rockland County N.Y. As a trusted partner to thousands of business clients in every state, we have been delivering reliable, current and complete information since 1999. Regardless of whether you are a small business owner or work for a fortune 500 company, we differentiate ourselves through our dedication to understanding your needs, creating the best solution, and providing unparalleled customer service.

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