Fair Credit Reporting Act Reminder
This notice is for employers who use third parties to conduct background checks or to secure other consumer reports on applicants or employees. The Fair Credit Reporting Act (FCRA) requires such employers to provide a series of specific written notices. First, employers must provide their applicants and employees with a notice and authorization that a background check and consumer report may be obtained by an outside vendor. Second, if an employer intends to reject an applicant, fire an employee, or take some other adverse action on the basis of information contained in one of those background checks or reports, the FCRA requires employers to send the affected individual a “pre-adverse action notice,” along with a form prepared by the Consumer Financial Protection Bureau (CFPB) entitled Summary of Consumer Rights. Third, once the adverse action has been taken, the FCRA requires employers to send an “adverse action notice.”
Recently, the CFPB issued a revised Summary of Consumer Rights. The new summary contains language regarding an individual’s right to place a security freeze on their credit report. Employers should enclose this new summary with their pre-adverse action notices. Although the new language in the summary is unlikely to have a big impact on employers, failing to enclose the new summary with each pre-adverse action notice puts employers at risk of violating the FCRA.
If you are relying on an outside entity’s FCRA forms, they should be reviewed closely to ensure that they are fully compliant as your organization can ultimately be responsible for any errors.
Here are links to model notices that are compliant with the FCRA, as well as the updated Summary of Consumer Rights with the necessary security freeze language.
- Model FCRA Adverse Action Notice
- Model FRCA Notice and Authorization
- Model FCRA Pre-Adverse Action Notice
- CFPB Summary of Consumer Rights
If you have questions, please contact a member of Miller Johnson’s employment and labor practice group.