Employers Must Utilize New Fair Credit Reporting Act (FCRA) Summary of Rights Form

Q: My company uses a third-party vendor to conduct background checks on prospective employees.  We heard there is a new model for the “A Summary of Your Rights Under the Fair Credit Reporting Act” notice.  Should we be using it?

A: Yes.

The Fair Credit Reporting Act (FCRA) establishes strict procedures that employers must follow when obtaining background check reports on applicants or employees from a third party “consumer reporting agency.” The FCRA requires employers to provide written disclosures to and seek affirmative consent from applicants and employees before procuring these types of background check reports.

The FCRA also imposes requirements on employers to provide notices to applicants and employees whom the employer intends to not hire, terminate, or demote based upon the results of a background check report. In complying with these notice requirements, employers are required to give applicants and employees a description of their rights under the FCRA.

The Consumer Financial Protection Bureau (CFPB) is responsible for enforcing certain aspects of the FCRA, and publishes a model notice entitled “A Summary of Your Rights Under the Fair Credit Reporting Act” that most employers utilize to comply with the FCRA.

Earlier this year, Congress adopted legislation called the Economic Growth, Regulatory Relief, and Consumer Protection Act. This law requires nationwide consumer reporting agencies to provide “national security freezes” free of charge to consumers, which restricts prospective lenders from obtaining access to a consumer’s credit report, thereby making it harder for identity thieves to open accounts in the consumer’s name.

The newly enacted law requires that whenever an applicant or employee (“consumers” for purposes of the FCRA) is provided a summary of their rights under the FCRA, they must also be informed of the new right to a security freeze.

Earlier this month, the CFPB released a new model “A Summary of Your Rights Under the Fair Credit Reporting Act” notice, which incorporates information about consumers’ right to a security freeze. The new form (“Summary of Consumer Rights”) can be found here. As this new form went into effect on September 21, 2018, employers should begin utilizing the new form immediately.

If you have any questions or concerns about the new form or your business’s compliance with the Fair Credit Reporting Act, please contact any member of the Pepper Hamilton Labor and Employment team.

–Lee Tankle