On September 12, 2018 the Consumer Financial Protection Bureau (CFPB) issued an interim final rule updating two model disclosure forms to reflect changes made to the Fair Credit Reporting Act (FCRA). Employers who conduct employee and applicant background checks must begin using the new model disclosure forms immediately in connection with those checks.
The FCRA applies to an employer when the employer uses a consumer reporting agency to obtain a background check on an employee or applicant. The reports obtained from these third party agencies usually contain a wide range of information on the employee or applicant including credit information, personal characteristics, location of residence and lifestyle details (home ownership, rentals, vehicle information, etc.) and in many cases, any criminal history.
Employers are required by the FCRA to make certain disclosures and obtain certain written consents before obtaining these third party background checks (or “consumer reports”). Of primary significant to employers, pursuant to the interim final rule issued, the CFPB updated the Summary of Consumer Rights form to provide notice of new security freeze rights to the employee or applicant. The Summary of Consumer Rights is a summary of rights to obtain and dispute information in consumer reports and to obtain credit scores.
The new security freeze rights allow an employee or applicant to obtain a “national security freeze” from the consumer reporting agency providing the consumer report. The national consumer reporting agencies are required to provide these “national security freezes” free of charge. The “national security freeze” restricts access to an individual’s credit report by prospective lenders, which may (in theory) make it harder for an identity thief to open an account in the employee or applicant’s name.
Employers are required to update their forms by today, September 21, 2018, to avoid exposure. The new Summary of Consumer Rights form, as well as the additional revised form, the Summary of Consumer Identity Theft Rights, may be obtained here.