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Please Read Carefully and Respond With Appropriate Letter.. Thanks!

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  • dberlin@icioffshore.com
    Friends: On December 5th 2001, House Financial Services Committee Chairman Michael Oxley, R-OH, and Subcommittee on Financial Institutions and Consumer Credit
    Message 1 of 1 , Dec 15, 2001

      On December 5th 2001, House Financial Services Committee Chairman Michael
      Oxley, R-OH, and Subcommittee on Financial Institutions and Consumer Credit
      Chairman Spencer Bachus, R-AL, have sent a letter to Federal Trade
      Commission Chairman Timothy Muris challenging the FTC's interpretation of the

      Fair Credit Reporting Act as it pertains to workplace investigations.

      More specifically, the Chairman requested that the so called "Vail letter"
      and similar staff interpretations be rescinded "pending further Congressional
      action." Importantly, the Oxley/Bachus letter states, "It is our view that
      Congress never intended for the FCRA to apply to investigations of workplace

      We view this letter as the first of many that will turn back some of the
      draconian legislation that passed through Congress, prior to September 11th.
      Privacy zealots were able to foist their interpretation of the revised FCRA
      upon the FTC as to mean that no workplace investigation could be conducted
      without prior permission of the target of such an inquiry.

      Moreover, after the investigation was concluded, the subject could obtain
      copies of all investigative and legal reports on the investigation, including
      statements of confidential sources and Whistleblowers. The net effect of
      this law was that all law firms in the United States that conduct any form of
      investigation on a person may itself be liberally construed as a Consumer
      Credit Reporting Agency, as defined under FCRA. Obviously, such a finding is
      not only ludicrous, but contrary to law, public policy and ABA Professional
      Conduct standards regarding confidentiality and privilege.

      Such a policy also significantly hampered corporate investigations and had a
      devastating effect upon businesses large and small. Privacy special
      interests would have it such that the target would have all the rights and
      protections of a normal and legitimate consumer, the while business would
      shoulder the cost to allow criminality to continue.

      On October 31, 2001, a meeting with the FTC's Chairman of Consumer Protection

      J. Howard Beales, III, was arranged by a number of professional organizations
      in our industry here in Washington.

      Although the FTC seemed somewhat understanding of the dilemma facing
      employers and investigators, they clearly indicated that it was up to
      Congress to ask for their advice and that the FTC did not provide Congress
      with unsolicited requests for changes in law.

      We do not opine on this claim, but leave it to the reader to decide whether
      any regulatory agency seeking to expand its budget, authority, staff and
      appropriation has not gratuitously offered Congress "suggestions and
      guidance," the net effect being to significantly expand that regulatory
      authorities powers and appropriations.

      Hopefully the letter to Chairman Muris will have that effect and we encourage
      you to write Chairman Muris as soon as possible to support this move by
      Congress, as it directly affects all businesses, as well as law firms that
      are engaged to conduct such investigations.

      We believe that under the current administration, and because of the present
      circumstances here in Washington, coercive and restrictive legislation, such
      that passed prior to September 11th, is a bygone relic.

      This letter is only the beginning of turning back to a more realistic
      approach to solving internal business problems and permitting lawyers to
      conduct legitimate inquiries.

      Following is a copy of the Oxley/Bachus letter to the FTC and we ask that you
      write a similar letter seeking reversal of FCRA implications upon legitimate
      workplace investigation. Moreover, please forward this email to all
      appropriate persons who can write similar letters to Chairman Marcus.

      U.S. House of Representatives
      Committee on Financial Services
      2129 Rayburn House Office Building
      Washington, DC 20515

      December 5, 2001

      The Honorable Timothy J. Muris
      Federal Trade Commission
      600 Pennsylvania Avenue, NW
      Washington, DC 20580

      Dear Chairman Muris:

      Prior to your becoming Chairman, the FTC staff issued an opinion letter
      dated April 5, 1999, from Christopher W. Keller to Judy Vail that indicated
      the Fair Credit Reporting Act (FCRA) applied to investigations of potential
      workplace misconduct conducted on behalf of an employer by most outside
      entities, such as law firms, consultants and professional investigation
      firms. These misconduct investigations, which normally do not involve
      employees' credit records, had never been thought to be covered by this
      credit reporting law until the FTC staff's pronouncement. Congress stated in

      the FCRA that its purpose was to preserve the integrity of the banking and
      credit industries. It is our view that Congress never intended for the FCRA
      to apply to investigations of workplace misconduct.

      This so-called "Vail letter" has generated tremendous practical problems
      for employers that we hope you will be able to assist us in resolving. As
      you may know, employers have a number of legal and ethical obligations to
      promptly investigate and take corrective actions with regard to a broad range

      of employee misconduct allegations including racial discrimination, sexual
      harassment, breaches of securities regulations, fraud and theft. Legal
      duties to investigate are imposed, for example, by the Civil Rights Act, the
      Equal Employment Opportunity Commission, and US Supreme Court
      interpretations. Moreover, employers in the securities industry have legal
      obligations to "police" their employees to ensure compliance with a host of
      antifraud and other regulatory obligations. The SEC and self-regulatory
      organizations (such as the New York Stock Exchange and the NASD) rely on
      self-policing by broker-dealers as the first line of defense against
      securities fraud.

      Unfortunately, as interpreted by the FTC staff, the FCRA poses serious
      conflicts and practical problems with regard to employers' fulfilling their
      workplace misconduct investigation duties. Among other things, application
      of the FCRA to employee misconduct investigation by outside professionals
      would mean that employers generally would have to obtain an employee's
      written permission for an outside firm to conduct an investigation of the
      employee's possible misconduct. In addition, upon request, the employer
      would have to provide the employee with a disclosure of the nature and scope
      of the investigation and a copy of all information in the report or file,
      which could be used to identify the individuals who furnished information to
      the investigators. Similarly, before taking any adverse action, the employer

      must provide the employee with a copy of the report, and a summary of his or
      her FCRA rights.

      Law firms, employment consultants, and other outside entities that undertake
      the misconduct investigations would be deemed to be consumer credit reporting
      agencies and would be subject to the numerous other FCRA requirements that
      apply to credit bureaus. In addition, these outside investigators would be
      subject to civil liability because of the conduct of the investigation,
      regardless of the reliability of the findings.

      The disclosures, prior authorizations and other FCRA provisions seriously

      hinder outside investigators' abilities to obtain important factual
      information and conflict with fundamental national policies embodied in our
      various civil rights, employment, securities and other laws and regulations.

      We believe that it is critically important to resolve the problems arising
      from the FTC staff's interpretation. Congress did not craft the FCRA to
      apply in this type situation.

      Your predecessor acknowledged in a March 31, 2000, letter to
      Representative Pete Sessions that the FCRA should not unduly hinder
      legitimate workplace investigations, and endorsed amending the FCRA to
      address at least some of these concerns. The FTC's General Counsel, Debra
      Valentine, testifying before the then House Banking and Financial Services
      Committee, on May 4, 2000, expressed similar views.

      In that regard, we feel that it would be helpful and appropriate for the
      FTC to have the Vail letter and any similar staff interpretations on this
      issue immediately rescinded pending further Congressional action.

      Thank you for your attention to this matter. Please feel free to have your
      staff contact Carter McDowall, Senior Banking Counsel to the Committee, with
      any questions.

      Yours truly,

      Michael G. Oxley Spencer T. Bachus
      Chairman Chairman

      Subcommittee on Financial
      Institutions and Consumer Credit

      Donald M. Berlin,
      Investigative Consultants, Inc.
      2020 Pennsylvania Avenue NW
      Suite 813
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