Question

Ethel applied for a job as a credit card account manager with a major financial institution. Your organization obtained her credit report through a third party investigation. She was not hired because of her recent bankruptcy and poor credit history. As the vice-president of human resources, you are aware of this situation because Ethel is suing the company for your hiring practices. Which of these facts of the case shows that your procedures were faulty?

a. Ethel received a copy of her credit report
b. Ethel was not given written notice the third party investigation was being conducted
c. Ethel was asked questions about how she made account decisions for credit applicants during the interview
d. Ethel's resume was incomplete
e. Credit problems are not reasonable exclusions for this job

Answer 1

The faulty procedure in Ethel's case is that she was not given written notice that a third-party investigation was being conducted, which is a requirement under the Fair Credit Reporting Act (FCRA).

Step-by-step explanation:

Considering Ethel's situation, the facts of the case indicate a potential issue with the hiring practices that led to the lawsuit. The crux of the problem seems to revolve around whether the procedures for evaluating Ethel's candidacy, particularly her credit report, complied with relevant laws and regulations.

Employers can legally use credit reports in the hiring process but must follow strict procedures. The Equal Credit Opportunity Act and the Fair Credit Reporting Act (FCRA) have specific requirements, such as providing written notice to applicants that a credit report will be used in the hiring decision and giving applicants a chance to address any negative information.

In Ethel's case, option b stands out: "Ethel was not given written notice the third party investigation was being conducted." This implies a failure to comply with the FCRA, which stipulates that written notice must be given when conducting such background checks, including credit reports.