Employers must begin using new Fair Credit Reporting Act (FCRA) forms no later than January 1, 2013. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 transferred FCRA rulemaking authority from the Federal Trade Commission (FTC) to the newly created Consumer Financial Protection Bureau (CFPB).
The FCRA regulates employers who use background checks provided by third parties, known as Consumer Reporting Agencies (CRA), as part of the employment process. Before an employer may obtain a background check on an applicant or employee from a CRA, the applicant or employee must be given certain information about the scope of the background check and must consent to the background check. This is where the new forms are relevant. The main change in the forms is that consumers must now contact the CFPB, rather than the FTC, about their rights under the FCRA.
What is confusing for employers is that the FTC’s website still has the old forms on it, and still has information about the FCRA, even though the CFPB is now the agency responsible for the FCRA and background checks. The new forms are not easy to locate, but can be found on the government’s website at the end of a very long document. You need to know that you are looking for Title 12, Banks and Banking Regulations, of the Code of Federal Regulations. Go to http://www.ecfr.gov/ in order to find the forms. Once you are at that website, find Title 12 “Banks and Banking,” and then scroll down to Part 1022, called “Fair Credit Reporting.” The actual forms for employers and CRAs are found at Appendix K (for employers) and Appendices M and N (for CRAs). Or you can access the new forms by using the links below.
The first of the new forms is called “A Summary of Your Rights Under the Fair Credit Reporting Act.” Employers must provide this form to applicants and employees when issuing a pre-adverse action letter, and in some other situations. PDFs for this form here.
The second new form is called “Notice to Users of Consumer Reports: Obligations of Users Under the FCRA.” This form must be provided by a CRA to users of their services, like employers. PDFs for this form can be found here.
The last new form is called “Notice to Furnishers of Information: Obligations of Furnishers Under the FCRA.” The FCRA requires CRAs to give this notice to entities that provide information under certain circumstances, such as when a consumer disputes some information in the background report. PDFs for this form can be found here.
Takeaways: Employers need to make certain they are using the correct “Summary of Rights” form no later than the beginning of 2013. Employers who fail to comply with the FCRA or to use the new forms may be subject to lawsuits for actual damages, attorney’s fees, statutory damages, and possibly punitive damages, depending upon whether the failure to comply with the FCRA was negligent or willful.