Effective January 1, 2013, employers must begin using a new Fair Credit Reporting Act (“FCRA”) notice in connection with their background screening process. The Consumer Financial Protection Bureau (“CFPB”) recently issued regulations updating the notice entitled “A Summary of Your Rights Under the FCRA” (“Summary of Consumer’s Rights”), among other notices.
The updated notices now refer to the CFPB, not the Federal Trade Commission, as the point of contact for any questions pertaining to the FCRA, and provide the CFPB’s website address, www.consumerfinance.gov/learnmore.
The FCRA requires employers to follow specific procedures when using third parties to procure consumer reports and/or investigative consumer reports (including credit, criminal background, motor vehicle records, and educational records checks, among others). In particular, employers must provide a copy of the Summary of Consumer’s Rights to an applicant or employee during various steps of the background screening process, such as when requesting applicant/employee authorization to perform a background check, when issuing pre-adverse action notices, and when sending adverse action notices (when the employer bases a negative employment action, in whole or in part, on results obtained from a consumer report).
The Summary of Consumer’s Rights Notice can be accessed via the CFPB’s website or by clicking here.
What Employers Should Do Now
By January 1, 2013, begin using the updated Summary of Consumer’s Rights notice, as required under the FCRA:
When obtaining an employee’s or applicant’s authorization to procure a consumer report and/or investigative consumer report;
When notifying an employee or applicant of your organization’s intent to take adverse action based on information that you received in connection with a background check; and
When providing notice that your organization will, indeed, take an adverse action based on information that you received in connection with a background check.
Review your organization’s background screening policies, including all forms and notices to employees, to ensure compliance with the FCRA.
While reviewing your forms and notices, ensure compliance with any applicable state FCRA statutes in states where your organization does business.
For more information about this Advisory, please contact:
Anna A. Cohen
Jennifer A. Goldman
Nicole Scarangella, a Law Student Extern in Epstein Becker Green’s New York office, contributed significantly to the preparation of this Advisory.
The CFPB, which was established under the Dodd Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), is now the federal agency primarily responsible for issuing rules, regulations, and guidance under the FCRA as well as enforcing the statute. Prior to the creation of the CFPB, the Federal Trade Commission (“FTC”) handled these tasks. While the CFPB has broad authority to administer and enforce the FCRA, the FTC retains some enforcement authority over FCRA and other federal consumer protection laws.
The other two notices that have been amended are: (1) the Notice to Users of Consumer Reports of their Obligations under the FCRA (“Notice to Users”) and (2) the Notice to Furnishers of Information of their Obligations under the FCRA (“Notice to Furnishers”). The Notice to Users is a notice that Consumer Reporting Agencies (“CRAs”) must provide to users of consumer reports (such as employers), who procure background checks. The Notice to Users can be accessed via the CFPB’s website or by clicking here. The Notice to Furnishers is a notice that furnishers of consumer information provide to CRAs. That notice describes the responsibilities of persons or entities that furnish consumer information to CRAs. The Notice to Furnishers is also available on the CFPB’s website, or by clicking here.
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This Advisory has been provided for informational purposes only and is not intended and should not be construed to constitute legal advice.