FCRA Says “Double Dipping” is an Illegal Practice 14 Apr 2017


You may have heard of the term “double dipping.” It often refers to dipping a chip you have already taken a bite out of, into the dip a second time. The nicest adjective for that action might be “unhygienic.” (Others might simply say it’s “gross.”) What you may not have known is that double dipping sometimes refers to illegal practices under the Fair Credit Reporting Act. Learn about double dipping under the FCRA, what’s wrong with it, and why employers should be concerned about it…


First: What is the FCRA? For those new to the FCRA, it is federal legislation designed to promote, accuracy, fairness and privacy of consumer information in files of consumer reporting agencies (CRAs). The main intention of the FCRA is to protect consumers from willful or negligent inclusion of inaccurate information in their credit reports or criminal background checks. The FCRA therefore regulates the collection, disclosure and use of all such information.

What then is a Consumer Reporting Agency? We discussed Consumer Reporting Agencies briefly in our article about online non-FCRA background screening agencies. In case you missed it, a CRA is a third party agency that collects and sells personal information on consumers, which the purchaser uses to decide whether to provide consumers credit, medical care, housing, insurance, and employment, among other things.

You may be subject to the FCRA if you run criminal background or credit checks on your job applicants or employees. If rather than using one of your own employees to check courthouse records (which could be very time-consuming), you use a background screening company, that company is a CRA. Both you and the CRA are now subject to the FCRA. If you either don’t do something required by the CRA or you do something not allowed under the FCRA, then you are in violation. You can face stiff penalties, and even multi-million dollar class action lawsuits.

There is another FCRA requirement, though. You must certify to the CRA the purpose of obtaining the credit report or background check. Will you be deciding whether to extend credit to an applicant? Lease him/her an apartment? Give him/her a mortgage or a job? Whatever your reason, you must certify that to the CRA.

Before we get into the details, what is the FTC? The Federal Trade Commission is an independent United States government agency established in 1914 by the Federal Trade Commission Act under President Woodrow Wilson. But what does the FTC do? It’s supposed to promote consumer protection and prevent and eliminate “anti-competitive practices” (think monopolies). In addition to enforcing anti-trust and similar laws, it enforces the FCRA.

Double- Dipping

Once you have certified to the CRA the reason for requesting the report, you may then only use that report for that purpose. Let’s assume you run a criminal background check on a job applicant, and you certify to the CRA that you will use the report to make a hiring decision, you may use it to make that hiring decision, only. You may not then turn around and give that report (or a copy of it) to a bank or credit card company that in turn will make a credit or banking decision.

Requesting a consumer report, using it for one stated purpose, and then using it for another – or giving it to another entity to use for another purpose – is, in Federal Trade Commission (FTC) lingo, “double dipping.” The FTC made it very clear in a February 2017 news release that you can’t do it.

What if you originally have in mind to request the report to decide whether to lease an apartment to someone, but they also applied for a job? Can you request it for the lease application, and use it instead to decide on employment? The FTC says “No” here too. The FTC apparently includes this practice in its definition of double-dipping.

Why not? What’s the big deal? The FCRA is all about protecting a consumer’s rights. Consumers have a right to request copies of their own reports. Included in those reports is information on who else did a credit or criminal history inquiry. Consumers can then know who has used credit or background checks to make eligibility decisions. Following this particular FCRA requirement means that getting a new report “when you have a new purpose helps your business ensure that you obtain the most accurate information about the consumer.”

What happens if you ignore these warnings? If someone files a complaint against you with the FTC, you can be assessed penalties ranging from $100 to $1,000 per violation. In other words, for each time you request someone’s consumer report and double-dip you can be assessed penalties of $100 – $1,000. The amount depends in part on whether the FTC finds that the violation(s) is/are willful. If a class of employees files a lawsuit, then damages can reach into the millions. Is it worth the few minutes of time or the extra fee you might pay to obtain another, more updated report? You be the judge…