Job-seekers to be able to check credit reports

May 29, 1991|By Barry Meier | Barry Meier,New York Times News Service

The Federal Trade Commission said yesterday that it was moving to protect prospective employees from being turned down for jobs because of inaccurate credit reports.

The agency said Electronic Data Systems Corp. had agreed to settle charges that it had denied jobs to some people partly because of poor credit reports but had never told them that was the reason.

Under the Fair Credit Reporting Act, a prospective employer must disclose that fact so an applicant can review the report and correct any errors.

Randy Dove, a spokesman for EDS, which is based in Dallas, said that about 150 people had been turned down for jobs since 1989 in part because of unfavorable information in their credit reports.

In settling the case, EDS agreed to notify those people about the decision and to provide them with the name of the credit-reporting agency so they could obtain a copy of the report.

The case is the first of its kind, but Barry Cutler, director of the FTC's Bureau of Consumer Protection, said the agency had begun a broad investigation into the issue.

"Several companies, both large and small, have been notified that they are the subject of inquiries involving the same question," said Mr. Cutler, who declined to elaborate.

The FTC action reflects an increasing concern both in government and among consumer groups about the widespread use of reports supplied by credit-reporting companies and their potential for inaccuracy. Errors on the reports may result in denial of loans and jobs.

Jean Noonan, the FTC's associate director for credit practices, said that an increasing number of companies were using credit reports either as part of the initial screening process for a prospective employee or as a final credit check when a job was offered.

Ms. Noonan said she believed the use of such reports was growing because of federal limitations on the use of polygraphs.

Based on the results of its investigation, Mr. Cutler said the FTC was preparing a publication to notify employers of their responsibilities to disclose credit-reporting information to applicants.

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