Credit Reports

New FINRA Rule on Background Checks



FINRA (the Financial Industry Regulatory Authority) has issued a rule change for background screening requirements that goes into effect on July 1, 2015. FINRA Rule 3110(e) is based on similar provisions in NASD Rule 3010(e) and NYSE Rule 345.11. For those of us who are acronym challenged, that’s the National Association of Securities Dealers and the New York Stock Exchange, respectively.

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New York City Prohibits Use of Employment Credit Reports

New York City

Earlier this week, the New York City Council passed a bill that makes it unlawful for employers to request or use an job applicant’s credit history for employment purposes as part of their background screening practices. Intro Bill 261-A amends the City’s Human Rights Law to make it an unlawful discriminatory practice for an employer to use an individual’s consumer credit history in making employment decisions. The bill is expected to be signed by Mayor Bill DeBlasio and will be effective 120 days following approval.

The city council created a limited set of exemptions for sensitive positions (see below), however it’s worth noting that these exemptions are much more narrow than those provided in similar state laws.

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3 Background Screening Practices to Prevent Casino Employee Theft

Casino employee theft

Is your business being sabotaged by its own employees?

For many employers in the gaming industry, the answer to this question may be a surprising one. Research shows that almost half of all losses in casinos is due to employee theft. In casinos, theft can happen in many different places, from the cashier cage to the vault rooms to the casino floor.

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Big Reforms Announced by Big 3 Credit Bureaus


Later today, the big three credit bureaus, Experian, Equifax and TransUnion are expected to announce major new reforms on how they will report adverse information on a consumer’s credit report and the steps they will take when a consumer wishes to dispute the information. What’s The Difference

According to the Wall Street Journal, the credit bureaus have agreed to wait 180 days before adding any medical debt information. During this time, consumers will have the opportunity to clear up the debt. When an insurance company pays off medical debt, they will quickly be removed from report (as opposed to other negative information which can stay on a report for up to seven years). (more…)

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5 Steps to a Successful Background Check in Financial Services


You work hard to safeguard not only your company’s finances, but those of your clients as well. And as a company in the financial services industry, you deal with both on a daily basis. From a business perspective, it’s vital to the success of your organization that your finances are not only in order, but that you can entrust your company’s financial information with your employees. From a personal perspective, you are serving a wide range of customers—who are entrusting your company with both their personal and financial information.

For an industry that’s already heavily regulated to keep sensitive information secure, you have to wonder, is it possible to increase security? When it comes to the safety of your company as well as your customers—you can’t be too careful. And your customers’ information should be particularly safeguarded by your employees, whether you work for a bank our any other financial institution (private wealth management, brokerage services, credit union, credit card company, insurance company…the list goes on). (more…)

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Think You’re Cut Out For Doing Employment Credit Reports?

HR's Guide to Employment Credit Reports

What’s in a credit report? Credit reports are not routinely used in pre-employment screening. In fact, our most recent survey revealed that only 12% of employers use them regularly. However, employment credit reports can be valuable to hiring managers as a part of the employment background check process because they can offer insight into an applicant’s reliability and offer clues about a person’s sense of personal responsibility. An employment credit report might include derogatory credit information, public record filings (bankruptcies, liens and judgments), account standing with creditors, and other clues like previous address history.

Credit reports also allow employers to quickly verify and expand on information they receive from applicants. They can reveal additional information that may prompt further review of the applicant and their past. They also provide credit information that would not otherwise be shared by applicants but may have an impact on job performance.  These reports are especially useful for companies whose candidates will have check-writing privileges or other access to company funds.

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US Senate Bill Targets Credit Checks and FCRA Reform

Employment Credit Checks

US Senators Brian Schatz (HI) and Sherrod Brown (OH) introduced legislation on April 9, 2014 calling for credit reform. The bill, as introduced, would require significant changes for credit furnishers and consumer reporting agencies (CRAs). The Senators and bill supporters are calling the proposed legislation the “Stop Errors in Credit Use and Reporting”, or SECURE Act of 2014. The bill has been referred to the Senate Committee on Banking, Housing, and Urban Affairs.

Credit reporting agencies are beholden to both the Dodd Frank Act and the Fair Credit Reporting Act (FCRA). Based on the press releases that announced the introduction of the bill, supporters say that consumers need tighter rules for ensuring that credit reports are accurate. The stated purpose of the bill is, “To enhance the accuracy of credit reporting, provide greater rights to consumers who dispute errors in their credit reports, and for other purposes.” It’s the “other purposes” part that makes me nervous. (more…)

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Is Bad Credit Really Costing You That Job? EmployeeScreenIQ Trends Survey Reveals All

Employment Credit Checks

Nearly 600 human resources professionals opened up to EmployeeScreenIQ about how they use employment background checks to make hiring decisions and their candid feedback is detailed in our just-released, fifth annual survey of U.S. based employers. The new report looks at how companies manage the process of employment screening, their practices concerning Fair Credit Reporting Act (FCRA), Equal Opportunity Employment Commission (EEOC) guidance, candidates’ self-disclosure of criminal records and how they address adverse findings.

In the past few years, the EmployeeScreenIQ Trends Survey has become a benchmark many employers use to evaluate their background screening policies and practices. This year’s survey provides a unique cross-section of opinions and insights from an assortment of organizations and is a must-read for HR professionals that want to learn about what their industry peers are doing.

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Kaplan Higher Education Triumphs Again Over EEOC on Employment Credit Reports

Earlier this week, the Sixth Court of Appeals affirmed a lower court ruling granting summary judgment to Kaplan in a high profile lawsuit brought by the Equal Employment Opportunity Commission (EEOC v. Kaplan Higher Education Corp.) over their use of employment credit reports. First and foremost, we want to congratulate our good friend Pam Devata and her colleague at Seyfarth Shaw who have done a wonderful job on this case since it was originally filed.

You might recall that the EEOC lost its case in the lower court because the research conducted by their expert witness (which concluded that credit reports have a disparate impact on minorities) was flawed. And without that research, the EEOC’s case fell apart. The judge basically indicated that without reliable statistical evidence of discrimination, the EEOC’s hard line enforcement doesn’t stand up in court.

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6 Reasons Why Proposed Ban on Employment Credit Reports Will Fail

Massachusetts senator Elizabeth Warren has introduced a bill that will effectively bar employers from conducting credit checks on potential job candidates as part of the employment background screening process.  The proposed “Equal Opportunity for All” Act would make credit checks illegal in many cases except in specific areas such as national security.

Now let me be the first to say that this bill doesn’t stand a snowball’s chance in H-E-Double-Hockey-Sticks and I thought it would be good to highlight 6 ideas as to why. (more…)

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