Q?What are the permissible purposes of consumer reports under the Fair Credit Reporting Act (the “FCRA”)? [Ref. § 604. 15 U.S.C. § 1681b]

In general, subject to subsection (c), any consumer reporting agency (“CRA”) may furnish a consumer report under the following circumstances and no other:

(1) In response to the order of a court having jurisdiction to issue such an order, or a subpoena issued in connection with proceedings before a Federal grand jury.

(2) In accordance with the written instructions of the consumer to whom it relates.

(3) To a person, (the term “person” means any individual, partnership, corporation, trust, estate, cooperative, association, government or governmental subdivision or agency, or other entity, including a financial institution, which it has reason to believe

(A) intends to use the information in connection with a credit transaction involving the consumer on whom the information is to be furnished and involving the extension of credit to, or review or collection of an account of, the consumer; or

(B) intends to use the information for employment purposes; or

(C) intends to use the information in connection with the underwriting of insurance involving the consumer; or

(D) intends to use the information in connection with a determination of the consumer’s eligibility for a license or other benefit granted by a governmental instrumentality required by law to consider an applicant’s financial responsibility or status; or

(E) intends to use the information, as a potential investor or servicer, or current insurer, in connection with a valuation of, or an assessment of the credit or prepayment risks associated with, an existing credit obligation; or

(F) otherwise has a legitimate business need for the information

(i) in connection with a business transaction that is initiated by the consumer; or

(ii) to review an account to determine whether the consumer continues to  meet the terms of the account.

(G) is for executive departments and agencies in connection with the issuance of government-sponsored individually-billed travel charge cards.

(4) In response to a request by the head of a state or local child support enforcement agency or a state or local government official authorized by the head of such an agency.

(5) To an agency administering a state plan under Section 454 of the Social Security Act (42 U.S.C. § 654) for use to set an initial or modified child support award.

(6) To the Federal Deposit Insurance Corporation or the National Credit Union Administration as part of its preparation for its appointment or as part of its exercise of powers, as conservator, receiver, or liquidating agent for an insured depository institution or insured credit union under the Federal Deposit Insurance Act or the Federal Credit Union Act, or other applicable federal or state law, or in connection with the resolution or liquidation of a failed or failing insured depository institution or insured credit union, as applicable.

Q?Are asset searches legal? Who can obtain bank account information and why?

Asset searches which may include bank and investment accounts, are not illegal; however, certain actions to obtain this information, such as pre-texting, are illegal. And although there are methods that can be used to obtain financial information covertly, most, if not all, are questionable and often futile. There is no clear way for anyone other than the account holder, a designated representative or a party with a valid court order to get account information without violating the law.

There is a general misconception that a judgment, just by virtue of its issuance, can be used to force a bank or financial institution to disclose account information, but the enforcement of judgments is governed by each state’s laws. In California, for example, a writ of execution is necessary. These writs are rendered on a county-by-county basis and direct a levying officer (usually a sheriff) to serve the writ on the named institution. The institution then may be required to freeze the account and in some cases, to hand over the account balance. State laws also allow the creditor, after a judgment is obtained, to examine and request asset information from the debtor. This, however, puts the debtor on notice and may result in draining an account before a writ of execution is served.

Q?What is in SI’s preliminary report and in a final report?

A preliminary report is issued when there is a delay in obtaining a document or some information, such as a court file or a response from an educational institution, etc.  The preliminary report contains all information obtained until the date of its issuance. Depending on the client’s preference, the final report contains only the results that were pending, or the pending results are incorporated into the information provided in the preliminary report.

Q?Why are SI’s reports so brief (in terms of number of pages) in comparison to some that may have hundreds of pages?

SI believes that the client should have at a glance all the information it needs to make a business decision. The report’s executive summary contains an analysis of the noteworthy and negative information located. The narrative portions in the body of the report represent only the elements for which records were found, while the summary charts provide the results of all searches and their jurisdictions and/or sources.

Q?Why does SI sometimes charge for name variations?

In many instances, each name variation requires a separate search performed in the same way as for the primary name, and carries separate access charges imposed by the particular records venue.

Q?What is a “jurisdiction” and how do you determine which jurisdictions to search?

“Jurisdiction” generally refers to the power of a court to adjudicate cases and issue orders, and to the territory within which a court or government agency may exercise its authority. For a legally binding verdict, a court must have both subject matter jurisdiction and personal jurisdiction. While a subject matter jurisdiction’s extent is clear, as its powers are ruled by state legislatures and Congress, a personal jurisdiction can be more difficult to establish, as it has four determinative categories: domicile/place of business, presence, consent and minimum contact.

SI typically recommends searches in all jurisdictions of residence reported more than once within a seven- or 10-year scope, and in the current jurisdiction of employment. Searches generally are not recommended in the jurisdictions of addresses that are P.O. boxes, military bases or vacation homes.

Q?What are “national criminal databases” and does SI search these databases for employment-purpose reports?

Compiled by private aggregators, national criminal databases provide limited information from various sources including county and federal courts, state criminal record repositories, sex offender registries, prison systems and proprietary data collections from 42 states. However, the millions of records gathered for these databases differ widely because of variations in reporting standards and requirements for individual states and local jurisdictions. Many of the indices are incomplete, sporadic in coverage, outdated or inconsistently updated and provide limited or no identifying information, making common name “hits” nearly impossible to identify with a subject. Thus, although a “hit” may appear in this type of database, it may be among such a large number of “hits” that it is not practical to sort through them or even if reviewed and potentially identified to a subject, can only be used as an indicator that there may be a record. Similarly, if there is no “hit,” this does not mean that the subject has no record.

For employment-purpose reports, SI will only search these databases if specifically requested by the client, and in accordance with a mutually defined nondiscriminatory approach that is consistent with the client’s background screening policy. SI will not report any record unless it has been verified directly by the reporting court jurisdiction. [In California, a CRA can only report a criminal conviction or other matters of public record for employment purposes if “it is complete and up-to-date,” which is defined as checking the status at the time the matter is reported. Ref: California Civil Code § 1786.28(b).]

Q?Does SI have offshoring operations?

SI is an American company with no offshoring operations. SI prepares its reports based on information available in the United States; even if a foreign element is involved, SI will attempt to obtain the information through domestic sources. In instances that necessitate an in-country verification or research, SI adheres to the U.S.-EU Safe Harbor and the U.S.-Swiss Safe Harbor frameworks or if applicable, other privacy rules, and requires its foreign providers to follow the same provisions and abide by all laws and regulations (as noted below.)

SI opposes the offshoring of background screening services that can be performed domestically, as the practice has been shown to have a negative impact on both employers and consumers. Companies that use consumer reporting agencies (CRAs) to conduct their employment-purpose background screening may be unaware that these services are being performed out of the country, as CRAs that have offshore operations frequently provide limited or no disclosure to avoid the adverse implications associated with the practice. And most job applicants probably do not realize that that their Personally Identifiable Information (“PII”) will end up outside the U.S. and its territories, in a foreign call center or data processing location well beyond the protection of U.S. privacy laws. Even if the foreign employee is well-trained, communication issues are inevitable, which affect the quality of service or result in a delayed or disregarded response. Identity theft concerns make references and other contacts reluctant to provide any information to foreign callers.

Q?Since SI has no foreign offices, does SI have international capabilities?

SI has had international capabilities for 19 years, through an established network of carefully-vetted subcontractors. SI requires these subcontractors to sign contracts affirming that they will perform SI’s assignments in accordance with all applicable laws and regulations, and the U.S.-EU Safe Harbor and the U.S.-Swiss Safe Harbor frameworks as set forth by the U.S. Department of Commerce regarding the collection, use, and retention of personal information from European Union member countries and Switzerland. For non-member countries, also pursuant to contractual agreements, SI requires that the subcontractors maintain adequate safeguards with respect to the protection of data privacy and the corresponding rights of individuals.

SI also requires that its providers submit a written report of their findings in English, along with explanations and/or translations of certain items, such as legal codes, meaning of records, definition of crimes, and anything that may be particular to the country/location where the search was performed. The SI research analyst then reviews and summarizes the information for the client report, which is always prepared and processed in the United States. The report subsequently undergoes up to three reviews by SI’s specialized quality control staff, which includes an employee with a law degree, for, among other criteria, potential legal issues. (SI has had no instances where an authority has asserted that we and our subcontractors have violated a law.)

Q?What are the general terms of SI’s privacy and security policy?

SI takes all reasonable administrative, technical, physical and managerial procedures to protect personally identifiable information from loss, misuse and unauthorized access, disclosure, alteration and destruction. All employees undergo background checks, sign confidentiality agreements, and are regularly trained in privacy practices and procedures.

SI provides its services nationally and internationally, and complies with all applicable privacy laws and regulations, including those of the Fair Credit Reporting Act (“FCRA”), the Graham-Leach-Bliley Act (“GLBA”), the Fair and Accurate Credit Transactions Act (“FACTA”), the U.S.-EU Safe Harbor Framework and the U.S.-Swiss Safe Harbor Framework as set forth by the U.S. Department of Commerce. When the foregoing or other laws and regulations require that SI observe privacy restrictions beyond those specifically stated in our privacy policy, we undertake our activities in conformance with their requirements and, if the privacy restrictions conflict in any way with these provisions, SI abides by the stricter requirements of the relevant laws, rules and regulations. Each client retains SI’s services pursuant to specific contractual arrangements, which stipulate, among other terms, agreements that SI will maintain all information and services provided to the client as confidential, and that it will not resell the information or use the information for any other purpose without explicit client authorization.

SI has certified that it adheres to the Safe Harbor Privacy Principles of notice, choice, onward transfer, security, data integrity, access, and enforcement. Visit http://www.export.gov/safeharbor/ to view SI’s certification.

SI successfully passed several client audits, including a recent one by a financial institution. (For further information regarding SI’s privacy policy, click here.)

Q?Has SI ever been the subject of a regulatory action or litigation in connection with its search services?



This section is for general informational purposes only, and does not constitute legal advice. No recipients of this  content, or any other content from our website, should act, or refrain from acting, on the basis of any information included therein without seeking the appropriate legal advice from a qualified attorney licensed in the applicable jurisdiction.