On September 12, 2018, the Consumer Financial Protection Bureau (CFPB), the federal agency which oversees the federal Fair Credit Reporting Act (FCRA) issued an interim final rule updating the agency's model FCRA notice. The new form replaces the old form effective September 21, 2018.
As background, the Fair Credit Reporting Act (FCRA) has a number of technical requirements with which an employer must comply in connection with using background information concerning an applicant or employee, if the information is procured from a consumer reporting agency (the FCRA refers to such a background check as a "consumer report" or "investigative consumer report"). Failure to comply with those technical requirements can result in liability, even if the employer is otherwise fully justified in relying on the background information. There has been a very substantial increase in FCRA litigation – and employer liability – as plaintiffs' attorneys have discovered this trap for the unwary.
One such requirement is providing individuals with a notice of their rights under the FCRA. More specifically, when an applicant or employee "fails" a background check covered by the FCRA, the employer is required – before disqualifying the applicant or taking adverse action against the employee – to provide the individual with: (1) a copy of a specific form summarizing rights under the FCRA; (2) a copy of his or her consumer report; (3) a copy of any applicable state or local notice(s); and (4) an opportunity to dispute the information contained in the report. Failing to provide the updated FCRA summary of rights form could result in a violation of the FCRA, and liability.
Employers' Bottom Line
To avoid potential risk and liability, employers should begin using the new form beginning September 21, 2018. The updated form is available here or from the CFPB web site at https://www.consumerfinance.gov/about-us/newsroom/bureau-consumer-financial-protection-issues-updated-fcra-model-disclosures/. (Scroll to the bottom of the page to see the link to the revised Summary of Consumer Rights, available in both English and Spanish.) Employers who have not already done so should also have their background and credit check forms and procedures reviewed by legal counsel to ensure compliance with the overall requirements of the FCRA.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.