For employers that use credit and consumer background checks to make employment decisions, there is a new Summary of Consumer Rights form that must be provided when taking an adverse action under the Fair Credit Reporting Act (“FCRA”). This requirement became effective on September 21, 2018.
FCRA is intended to promote accuracy, fairness and privacy of information in consumer reports. When an employer uses such a report for an adverse action, the affected party is to receive notice. This notice, which will include the Summary of Consumer Rights, alerts the individual to actions that can be taken to dispute incomplete or inaccurate information. The new form identifies when a consumer may be entitled to a “security freeze,” which is designed to prevent others from opening credit, loans or other services without the individual’s consent.
This change arose when, in May 2018, Congress passed the Economic Growth, Regulatory Relief, and Consumer Protection Act. The legislation addresses consumers’ rights to a national security freeze. The freeze is intended to restrict lenders from accessing an individual’s information, thereby reducing the risk that identity thieves can open accounts in the individual’s name. Employers should immediately begin using the updated CFPB form, or make appropriate updates to their own form, to avoid any gaps in compliance.