When and why are Pre-Adverse and Adverse Action Letters appropriate to use?
Pre-Adverse Action and Adverse Action Notifications are the result of negative information being found on a pre-employment background screening or a pre-employment credit check. The FCRA requires that in the event of negative information being found, that the applicant/employee be issued a Pre-Adverse Action Notice, which states that an adverse employment action will be taken due to the findings. The notice is to include full disclosure of the consumer report/screening detailing the negative findings, along with the consumer
reporting agencies’ name and contact information. Once the applicant/employee receives the Pre-Adverse Action Notice, they must be given ample time to reply/dispute the information. This is normally about 5 days. If, after 5 days has passed, the individual has not made contact with the hiring company or the CRA, the Adverse Action Notice is issued. The Adverse Action Notice has very similar verbiage as that of the Pre-Adverse Action Notice, and notifies the individual of the final decision of the company not to hire them or retain them as an employee, due to the adverse information found during the background check.
Both the Pre-Adverse and Adverse Action Notices are required for compliance by the FCRA.