WASHINGTON (FNS) -- R.H. Macy & Co., Inc., has agreed to notify job applicants if their credit history prevents them from being hired, according to a settlement reached with the Federal Trade Commission.
Macy's was cited by the FTC for not following disclosure requirements of the Fair Credit Reporting Act.
Under the agreement announced Wednesday by the FTC, Macy's must send letters to all applicants explaining they were rejected on the basis of their credit history. They must also tell them where they can get a copy of their record.
These letters must also be sent to applicants rejected since Jan. 1, 1990 on the basis of their credit histories.
In recent years, more companies have been using credit checks. This sparked the FTC investigation, an FTC spokeswoman said.
In addition to Macy's, shoe retailer The Kobacker Co., Columbus, Ohio; metals maker Keystone Carbon Co., St. Marys, Penn.; and McDonell Douglas Corp., St. Louis, were cited for not notifying applicants of credit checks.
"Employers are relying on these credit checks more and more because, in many cases, they are the only legal way for them to get background information," the spokeswoman said. She noted that lie-detector tests for pre-employment screening have been restricted by federal law, which went into effect in April. Credit histories contain bill paying, job, housing and criminal records.
A spokesman for Macy's said the company doesn't "routinely" run credit checks on job applicants, but noted that checks are done in certain cases. He did not enumerate what those cases would be.