CFPB Advisory on FCRA Permissible Purpose Explained

You rely on background checks to make fast, confident hiring and rental decisions. But regulators are paying close attention to why you pull a report, not just what’s in it.

In July 2022, the Consumer Financial Protection Bureau (CFPB) issued a legal advisory opinion titled “Fair Credit Reporting; Permissible Purposes for Furnishing, Using, and Obtaining Consumer Reports.” It zeroes in on when a consumer report can legally be furnished under the Fair Credit Reporting Act (FCRA), and what happens when that line is crossed.

This post breaks down what that advisory means in practical terms for employers and landlords who order background checks.

What the CFPB advisory opinion says

The CFPB’s advisory interprets the FCRA’s permissible purpose rules (primarily 15 U.S.C. § 1681b(a) and § 1681b(f)). According to the opinion (CFPB advisory, July 7, 2022):

• A consumer reporting agency (CRA) may only furnish a report when it has reason to believe there is a specific permissible purpose under the FCRA.
• Users of reports (like employers and landlords) may not obtain or use a report unless they themselves have a permissible purpose.
• It is unlawful to provide or obtain reports for unauthorized purposes such as marketing, lead generation, or curiosity searches.
• “Matching” or sharing consumer data without a certified permissible purpose can still violate the FCRA, even if no full report is printed.

The CFPB also warns that misuse of consumer reports, or failure to have adequate controls around purpose, can be treated as an unfair or deceptive practice under other federal laws.

What “permissible purpose” means under the FCRA

Under the FCRA, permissible purpose is the legal justification that allows a CRA to provide a consumer report in the first place. For most employers and landlords, that purpose falls into two categories in 15 U.S.C. § 1681b(a):

• Employment purposes — evaluating a person for hiring, promotion, reassignment, or retention. The FTC reads “employment purposes” broadly, so it also covers volunteers, independent contractors, and similar non-traditional roles. In other words, volunteer screening isn’t a separate category — it fits under the employment purpose, with the same authorization, disclosure, and adverse-action obligations.
• Tenant screening — evaluating an applicant in connection with a housing or rental decision.

Importantly, the advisory stresses that both sides must be covered:

• The CRA must have reason to believe a permissible purpose exists before furnishing.
• The employer or landlord must actually use the report only for that permitted reason.

This is why NCS asks for the permissible purpose when an account is created and why we curated specific packages.

What changes for employers and landlords

The advisory doesn’t create new statute, but it does sharpen how regulators may enforce existing rules. In practice, it means employers and housing providers should expect more scrutiny around:

• Purpose clarity. As the user of the report, your legal duty is to have a permissible purpose and certify it to your CRA (15 U.S.C. § 1681b(f)). Certifying a recognized purpose, such as “employment purposes” or “tenant screening”, is enough to meet the statute; you don’t have to pin each report to a specific hiring decision or rental unit. Capturing that extra detail is simply good practice: it documents why a report was ordered and helps you avoid reusing one report for a different decision later.
• No “extra” uses. Pulling a report for one job and then using it later for another role, or another business purpose, can fall outside permissible purpose.
• Vendor oversight. Regulators will look at how you choose and oversee CRAs and data providers to ensure they honor purpose limits.

If your processes were already built around FCRA compliance, this opinion is more of a spotlight than a course change—but it raises the risk of enforcement where controls are weak.

What stays the same

For day-to-day background checks, many core rules are unchanged:

• You still must obtain the individual’s written authorization before ordering an employment report, and provide required disclosures under the FCRA.
• You still need to certify to your CRA that:
  • You have a permissible purpose, and
    • You will use the report only for that purpose and in compliance with the FCRA (15 U.S.C. § 1681b(b)).
• Adverse action requirements still apply if you may deny a job or housing based in whole or in part on a report.
• State and local laws (such as “ban‑the‑box” and fair chance ordinances) still control when in your process you can run a check and how you evaluate records.

The CFPB advisory does not replace federal or state law and is not a substitute for legal advice. When questions are close calls—especially around new uses of consumer data—confirm your approach with employment or housing counsel.

Practical steps to stay compliant

To align with the CFPB’s focus on permissible purpose, employers and landlords can:

• Map each step to a purpose. Document which FCRA purpose applies to each type of report you order (pre‑hire, promotion, tenant screening, volunteer roles, etc.).
• Tighten internal policies. Make it clear who can request a report, for which roles or properties, and for what reasons. Prohibit “curiosity” checks.
• Limit reuse of reports. Avoid using the same report for different positions, properties, or later decisions without confirming that the original permissible purpose still applies.
• Review your authorization and disclosure forms. Ensure they accurately describe the purpose for which reports will be obtained and used.
• Monitor vendors. Work with FCRA‑compliant CRAs that:
  • Require written certification of permissible purpose, and
  • Have controls to prevent unauthorized access or use.
• Train managers and leasing staff. Anyone who can initiate a background check should understand when it is—and is not—allowed.
• Keep records. Maintain documentation of your permissible purpose and certifications for each report in case of a regulator or plaintiff’s attorney asking questions later.

How NCS helps

We build our services around permissible purpose from the start. When you order employment or tenant screening reports through National Crime Search, our packages and services are specifically designed to support FCRA‑compliant use of criminal searches, verifications, motor vehicle reports, credit reports, drug testing and E‑Verify.

We also provide tools and guidance you can use—together with your legal counsel—to standardize how background checks fit into your hiring or rental process.

Ready to put a compliant framework behind your screening program? Get started with an NCS account.