Written by Hogan Lovells
Effectively immediately, employers who perform background checks on applicants or employees using third party consumer reporting agencies (these background checks are known as “consumer reports”) need to update their background check paperwork under the Fair Credit Reporting Act (“FCRA”) by replacing their old “Summary of Your Rights Under the Fair Credit Reporting Act” forms with a new, revised version, available here. The new version of the form includes information regarding an individual’s right to obtain a security freeze or fraud alert on his or her credit report, consistent with recent amendments to the FCRA.
As background, the FCRA imposes a number of technical requirements on employers and consumer reporting agencies that must be satisfied in order to lawfully obtain a consumer report, including providing an appropriate disclosure and obtaining authorization from the employee or applicant before the consumer report is obtained. The FCRA also imposes certain notice requirements before taking adverse action against an applicant or employee based on a consumer report. Full compliance with these technical requirements is important, as technical FCRA violations can sometimes serve as fertile ground for class actions.
One of the FCRA’s notice requirements is that employees and applicants must be provided with a form entitled “Summary of Your Rights Under the Fair Credit Reporting Act” on certain occasions, including before taking adverse action based on material obtained from a consumer report, or before obtaining an “investigative consumer report,” which is a consumer report which includes information obtained from personal interviews conducted by a consumer reporting agency. Last month, the Consumer Financial Protection Bureau updated this form, and employers and consumer reporting agencies must immediately begin using the newly-revised form or, temporarily, may continue using the old forms but include a separate page in the transmittal of the old form which includes additional information regarding security freezes.
Employers should keep in mind that state law may impose additional requirements.