FCRA Adverse Action Process: Pre-Adverse Action and Final Notices Explained

The FCRA adverse action process is the sequence an employer follows when a background check from a screening company may lead to a negative decision about an applicant or employee. It has two notices, a pause between them, and a paper trail. This page covers what triggers it, what each notice must contain, and how to build it into a recruiting workflow. It is general information based on federal agency guidance, not legal advice. Review your process with your own counsel.

What counts as adverse action

The FTC treats employment background checks as consumer reports. Those reports can include credit reports and criminal records. When you use them to decide on hiring, retention, promotion or reassignment, the Fair Credit Reporting Act (FCRA) applies, and the FTC enforces it.

Adverse action is any unfavorable employment decision based on that report. The FTC lists rejecting a job application, reassigning or terminating an employee, and denying a promotion. The EEOC and FTC joint guidance gives not hiring an applicant or firing an employee as examples.

The notice steps apply when the information comes from a company in the business of compiling background information. Federal anti-discrimination rules apply no matter how you got the information. For a broader primer, see the guide to FCRA background check basics for employers and the glossary entry on what a pre-employment background check is.

Disclosure and authorization come first

An adverse action notice cannot fix a missing disclosure. Before you order a report, the FTC guidance lists these prerequisites:

• Disclosure: tell the person you might use a consumer report for employment decisions. It must be in writing, in a stand-alone format, and not inside the employment application.
• Authorization: get written permission. It can be part of the same document as the disclosure.
• Ongoing checks: if you want permission to pull reports throughout employment, say so clearly and conspicuously.
• Certification: certify to the screening company that you gave notice, got permission and will not misuse the information.

Pre-adverse action notice contents

If you are leaning toward a negative decision because of the report, stop before acting. Under FTC guidance, the pre-adverse action notice an employer sends must include:

• A notice that includes a copy of the consumer report you relied on.
• A copy of A Summary of Your Rights Under the Fair Credit Reporting Act. Your screening company should have given this to you.

Subject: Your background check report

Hi [Candidate name],

We received a background check report from [Screening company] as part of your application for [Job title]. Based on information in this report, we are considering a decision that may affect your application.

Attached are:
- A copy of the report
- A Summary of Your Rights Under the Fair Credit Reporting Act

No final decision has been made. Please review the report. If anything is inaccurate or incomplete, contact [Name] at [email or phone] by [date].

[Your company name]

Waiting period and candidate response

The point of the advance notice is simple. The FTC says it gives the person the opportunity to review the report and tell you if it is correct. A fcra pre-adverse action waiting period exists so that conversation can happen before the decision is locked in.

The FTC guidance quoted on this page does not set a specific number of days. Many employers set one consistent window in a written policy, confirmed with counsel, and apply it to every candidate. Consistency matters: the EEOC reminds employers to treat everyone equally.

• Log the date and method the pre-adverse notice was sent.
• Hold the requisition decision until the window closes.
• If the candidate disputes the report, pause and review before deciding.
• Record what the candidate said and how you responded.

A short text can tell a candidate to check their email for an important message, which helps in high-volume hiring where inboxes get missed. Keep report details out of the text itself. See how two-way SMS and automations can support candidate follow-up.

Final adverse action notice requirements

Once you decide, the adverse action letter after a background check closes the loop. The FTC says the notice can be given orally, in writing or electronically. It must include:

1. The name, address and phone number of the consumer reporting company that supplied the report.
2. A statement that the reporting company did not make the decision and cannot give specific reasons for it.
3. A notice of the person's right to dispute the accuracy or completeness of the information, and to get an additional free report from the company if requested within 60 days.

Documenting each step

1. 1 Save the signed disclosure and authorization Store the stand-alone disclosure and the signed permission with the candidate's file.
2. 2 Record the report and the decision trigger Note which report version and which item led to the potential decision.
3. 3 Log the pre-adverse notice Keep a copy of the notice, the attached report, the summary of rights and the send date.
4. 4 Track the response window Record any candidate reply, dispute or new information, and how you reviewed it.
5. 5 Log the final notice Keep a copy of the final notice with the required reporting-company details and rights language.
6. 6 Retain, then dispose Follow record retention rules, then securely dispose of the report when you are done using it.

Two rules frame the file. The EEOC says hiring records, including all application forms, must be preserved for one year after the records were made or a personnel action was taken, whichever is later, with longer periods for some employers. The FTC says that when you are done using a consumer report, you must securely dispose of it and any information gathered from it.

Common mistakes

• Skipping the pre-adverse notice and sending only a rejection.
• Placing the disclosure inside the job application.
• Forgetting the summary of rights.
• Using different waiting windows for different candidates or locations.
• Making the decision final before the window closes.
• Leaving out the reporting company's contact details in the final notice.
• Keeping no record of when and how notices went out.

Running notices inside your ATS

ATS Mako's integrated email client lets recruiters send candidate email from the same system they use to move people through hiring, and native SMS handles quick follow-ups. Because the platform is a fully brandable applicant tracking system, candidate messages carry your company's name. For multi-location teams, that means one place to run a consistent process. Offer steps that come before a check can live in the same flow through job offers and e-signature.