The Consumer Financial Protection Bureau (“CFPB”) issued a new “A Summary of Your Rights Under the Fair Credit Reporting Act” (“FCRA”) (“Summary of Rights”) form on September 12, 2018. This form replaces the previous version issued on November 12, 2012, and is expected to be implemented by employers on September 21, 2018.
The FCRA governs the manner in which employers may conduct background checks (by procuring “consumer reports” from consumer reporting agencies) in the hiring process and during employment. Among the many obligations it places on employers is the provision of certain notices and disclosures to applicants and employees throughout the process. One such requirement is for employers to provide, before making an adverse decision on the applicant, the Summary of Rights form along with a copy of the consumer report, when an applicant receives an unfavorable report result. This is intended to provide the applicant an opportunity to contest the report or provide further information. A failure to provide the correct notification at the correct time can lead to significant exposure, including class action litigation under the FCRA, which carries with it prescribed statutory damages and allows for the recovery of a punitive damages award.
The new Summary of Rights form includes several additional notices to consumers flowing from recent amendments to the FCRA. (The CFPB also issued a revised: Summary of Consumer Rights in Spanish; Summary of Consumer Identity Theft Rights; and Summary of Consumer Identity Theft Rights in Spanish.)
To mitigate the impact of these changes on users of the existing model form, the CFPB has indicated it will regard the use of the model form published on November 14, 2012 to constitute compliance with the FCRA provisions requiring such form, so long as a separate page that contains the additional required information is provided in the same transmittal.
Nevertheless, employers and background check companies should seek advice from their legal counsel to ensure their background check process and forms they provide comply with the new standards.