Most employers treat every background check the same way once they have a signed authorization on file. But the Fair Credit Reporting Act actually splits background reports into two categories, and the category determines what disclosures an employer has to send, when, and in what form. Get the category wrong and the extra notice obligations under Section 606 never happen, which is one of the more common FCRA compliance gaps that shows up in class action complaints.
This guide walks through the difference between a standard consumer report and an investigative consumer report under the FCRA, what triggers the investigative category, and why California treats nearly every background check as an investigative consumer report regardless of what the rest of the country calls it. The Federal Trade Commission’s own guidance for employers, Using Consumer Reports: What Employers Need to Know, is a useful starting reference for the baseline disclosure, authorization, and adverse action duties that apply before the investigative specific rules are layered on top.
What the FCRA actually says
The Fair Credit Reporting Act defines two distinct types of reports in its definitions section, codified at 15 U.S.C. 1681a (originally FCRA Section 603).
Consumer report, Section 603(d)
A consumer report is any communication from a consumer reporting agency that bears on a person’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living, and that is used or expected to be used to establish eligibility for employment, credit, insurance, or a similar permissible purpose. A typical pre employment background check, criminal record search, employment and education verification, and credit report all fall under this definition.
Investigative consumer report, Section 603(e)
An investigative consumer report is a subset of consumer report. It covers reports where information about a person’s character, general reputation, personal characteristics, or mode of living is obtained through personal interviews with neighbors, friends, associates, or others who are acquainted with the consumer, rather than pulled directly from records. The interview element is what separates it from a standard consumer report. If a screening company or an employer’s own staff calls people who know the applicant and asks about reputation, lifestyle, or character rather than simply confirming dates of employment or a degree, that reporting activity generally falls under the investigative consumer report definition.
Reference checks that ask a former supervisor to confirm title and dates are typically ordinary verification. Reference checks that ask a neighbor or acquaintance open ended questions about someone’s character, habits, or reputation are the kind of personal interview process the investigative consumer report definition was written to cover.
Why the distinction matters: extra disclosure duties under Section 606
Section 606 of the FCRA, codified at 15 U.S.C. 1681d, adds requirements that apply only when an investigative consumer report may be prepared. These sit on top of the standard FCRA disclosure and authorization steps that apply to every consumer report.
| Requirement | Standard consumer report | Investigative consumer report |
|---|---|---|
| Standalone written disclosure before the report is procured | Required | Required |
| Written authorization from the applicant | Required | Required |
| Separate written notice that an investigative report may be made, including a statement of the consumer’s right to request the nature and scope of the investigation | Not required | Required, generally within three days of when the request for the report was made |
| Employer must provide the nature and scope of the investigation in writing if the consumer requests it | Not applicable | Required, generally within five days of the request or five days of when the report was first requested, whichever is later |
| Pre adverse action and adverse action notices if the report contributes to a negative decision | Required | Required |
The three day written notice under Section 606(a)(1) has to disclose that an investigative consumer report may be made, and it has to state that the consumer has a right to request additional details about the nature and scope of the investigation. This is separate from the standalone disclosure and authorization document required under Section 604(b)(2) for every background check. Employers who only send the standard disclosure and skip the investigative notice have not completed the FCRA process for that report, even if the applicant signed everything they were given.
The exact timing language in the statute allows some flexibility, and employers who rely on personal interview based reference or reputation checks should build the three day notice into their process rather than treating it as optional paperwork. When in doubt about whether a specific screening product triggers Section 606, the safer compliance posture is to send the investigative notice.
California treats this differently: the ICRAA
California has its own statute layered on top of the federal FCRA, the Investigative Consumer Reporting Agencies Act, found in the California Civil Code starting around Civil Code Section 1786.16. California’s ICRAA defines an investigative consumer report more broadly than the federal statute in practice, and California courts and the state legislature have applied ICRAA notice and disclosure requirements to most employment background checks conducted in the state, not only reports built from personal interviews.
Under ICRAA, California employers generally must provide a specific disclosure that includes a check box allowing the applicant to request a copy of the report, along with a summary of the applicant’s rights, and this has to happen at the time the disclosure is made, not after the fact. The state statute also imposes its own notice content requirements that go beyond what the federal FCRA requires for a standard consumer report.
Because ICRAA’s scope is broader than the federal investigative consumer report definition, an employer running background checks on California applicants should assume ICRAA’s investigative consumer report notice and disclosure rules apply, and should not rely on federal FCRA classification alone to decide what paperwork to send. State law varies, and employers with applicants or employees in California should have counsel confirm the current ICRAA disclosure template rather than reusing a generic multi state form.
When does a background check trigger the investigative rules
- The screening company or employer contacts personal references, neighbors, or acquaintances and asks open ended questions about character, reputation, habits, or mode of living, rather than confirming factual employment or education dates.
- A tenant screening or employment screening process includes a personal interview component, sometimes marketed as a character reference check or reputation check, as opposed to a records only search.
- The applicant or employee is located in California, where ICRAA’s broader disclosure rules generally apply regardless of whether personal interviews are used.
Straightforward records based checks, such as a criminal history search, a motor vehicle record pull, an education verification that only confirms degree and dates, or a credit report, are consumer reports under Section 603(d) and do not by themselves trigger the Section 606 investigative notice, unless a personal interview component is layered on top or the applicant is in a state like California with its own broader statute.
Frequently asked questions
Does a standard criminal background check count as an investigative consumer report?
Generally no. A criminal record search pulled from court or database records without any personal interviews of neighbors, friends, or associates is a consumer report under FCRA Section 603(d), not an investigative consumer report under 603(e). The investigative category is specifically tied to information gathered through personal interviews about character and reputation.
What has to be in the three day investigative notice?
Section 606 requires a clear and accurate written disclosure that an investigative consumer report may be made, including information on the consumer’s character, general reputation, personal characteristics, or mode of living, along with a statement that the consumer has the right to request additional disclosure about the nature and scope of the investigation and a summary of consumer rights.
Do employers still need pre adverse and adverse action notices for an investigative consumer report?
Yes. The pre adverse action and adverse action notice requirements apply to any consumer report, including investigative consumer reports, whenever the information contributes to a decision not to hire, retain, or promote someone. The investigative notice under Section 606 is an addition to that process, not a replacement for it.
Why does California treat almost every background check as investigative?
California’s Investigative Consumer Reporting Agencies Act defines and regulates investigative consumer reports more broadly than the federal FCRA and has been applied to most employment screening conducted on California applicants. Employers with California applicants should follow California’s specific disclosure and check box requirements in addition to federal FCRA steps.
Can an employer combine the standard disclosure and the investigative notice into one document?
The FCRA requires the standalone disclosure under Section 604(b)(2) to be a clear and conspicuous document consisting solely of the disclosure. Employers should confirm with counsel whether their combined disclosure and investigative notice format meets the standalone requirement, since courts have found that adding extraneous material to a disclosure document can create liability.
What happens if an employer skips the investigative consumer report notice by mistake?
Missing the Section 606 notice when an investigative consumer report is used is a separate compliance failure from missing the standard disclosure, and both can expose an employer to FCRA claims. Employers who are unsure whether their screening process qualifies as investigative should treat borderline cases as investigative and send the additional notice.
For background on the general disclosure and authorization steps that apply to every background check, see our guide to the FCRA standalone disclosure requirement, and for what comes after a report contributes to a negative decision, see our FCRA adverse action process guide. For compliant background screening built around these federal and state requirements, visit Reveal Background.
This article is general information, not legal advice. Employers should consult qualified counsel to confirm FCRA and state specific compliance obligations, including California’s Investigative Consumer Reporting Agencies Act, before finalizing disclosure and authorization forms.
