FCRA Changes Effective January 1st For Employers Using Investigative Background Consumer Reports
Effective on January 1, 2013, employers will need to make minor changes to their Fair Credit Reporting Act (FCRA) notices, particularly in the mandatory section termed, “Summary of Rights”. These changes resulted when the Consumer Financial Protection Bureau assumed enforcement responsibility for the FCRA from the Federal Trade Commission.
Effective on January 1, 2013, employers will need to make minor changes to their Fair Credit Reporting Act (FCRA) notices, particularly in the mandatory section termed, “Summary of Rights.”.
Highlights of the employer’s responsibilities are summarized as follows:
• Disclose clearly to the applicant/employee your plans to obtain a “consumer report,” also known as a “background check,” from a consumer reporting agency, and seek the individual’s written permission to do so.
• Prior to seeking and utilizing an “investigative consumer report,” the employer must disclose its intent to obtain these reports and inform the applicant or employee of his/her right to request information regarding the “nature and scope” of the planned investigation.
• If employers plan to take adverse action against an applicant or employee because of information gleaned from these reports, the employer must give the involved individual a “pre-adverse” notice, a copy of the consumer report and a copy of the FCRA Summary of Rights.
• Additionally, the employer, who intends to go forward with the adverse action, must give the individual a formal “adverse action” notice that includes the additional information mandated by statute.
For your convenience, a copy of the latest FCRA Summary of Rights is printed below.
A Summary Of Your Rights Under the Fair Credit Reporting Act
The Federal Fair Credit Reporting Act (FCRA) promotes the accuracy, fairness and privacy of information in the files of consumer reporting agencies.
There are many types of consumer reporting agencies, including credit bureaus and specialty agencies (such as agencies that sell information about check writing histories, medical records and rental history records). Here is a summary of your major rights under the FCRA.
For more information, including information about additional rights, go to WWW.consumerfiance.gov/learnmore or write to: Consumer Financial Protection Bureau, 1700 G Street, NW, Washington, DC 20006.
• You must be told if information in your file has been used against you. Anyone who has a credit report or another type of consumer report to deny your application for credit, insurance or employment – or to take another adverse action against you – must tell you, and must give you the name, address and telephone number of the agency that provided that information.
• You have the right to know what is in your file. You may request and obtain all the information about you in the files of a consumer reporting agency (your “file-disclosure”).
You will be required to provide proper identification, which may include your Social Security number. In many cases, the disclosure will be free. You are entitled to a free file disclosure if:
o a person has taken adverse action against you because of information in your credit report;
o you are the victim of identity theft and place a fraud alert in your file;
o your file contains inaccurate information as a result of fraud;
o you are on public assistance;
o you are unemployed but expect to apply for employment within 60 days.
In addition, all consumers are entitled to one free disclosure every 12 months upon request from each nationwide credit bureau and from nationwide specialty consumer reporting agencies. See www.consumerfinance.gov/learnmore for additional information.
• You have the right to ask for a credit score. Credit scores are numerical summaries of your credit worthiness based on information from credit bureaus. You may request a credit score from consumer reporting agencies that create scores used in residential real property loans, but you will have to pay for it. In some mortgage transactions, you will receive credit score information for free from the mortgage lender.
• You have the right to dispute incomplete or inaccurate information.
If you identify information in your file that is incomplete or inaccurate and report it to the consumer reporting agency, the agency must investigate unless your dispute is frivolous. See www.consumerfinance.gov/learnmore for an explanation of dispute procedures.
• Consumer reporting agencies must correct or delete inaccurate, incomplete or unverifiable information. Inaccurate, incomplete or unverifiable information must be removed or corrected, usually within 30 days. However, a consumer reporting agency may continue to report any information it has verified as accurate.
• Consumer Reporting agencies may not report outdated negative information. In most cases, a consumer reporting agency may not report negative information that is more than seven years old, or bankruptcies that are more than ten (10) years old.
• Access to your file is limited. A consumer reporting agency may provide information about you only to people with a valid need—usually to consider an application with a creditor, insurer, employer, landlord, or other business. The FCRA specifies those with a valid need for access.
• You must give your consent for reports to be provided to employers. A consumer reporting agency may not give out information about you to your employer, or a potential employer, without your written consent given to the employer. Written consent generally is not required in the trucking industry. For more information, go to www.ftc.gov/credit.
• You may limit “prescreened” offers for credit and insurance based on information in your credit report. Unsolicited “prescreened” offers for credit and insurance must include a toll-free phone number you can call if you choose to remove your name and address from the lists these offers are based on. You may opt-out with the nationwide credit bureaus at 1-888-optout (1-888-567-8688).
• You may seek damages from violators. If a consumer reporting agency, or in some cases, a user of consumer reports or a furnisher of information to a consumer reporting agency violates the FCRA, you may be able to sue in state or federal court.
• Identity theft victims and active duty military personnel have additional rights. For more information, visits www.ftc.gov/credit.
States may enforce the FCRA, and many states have their own consumer reporting laws. In some cases, you may have more rights under state law. For more information, contact your state or local consumer protection agency or your state Attorney General.
Editorial Comment: Employment laws and language change frequently. That is why it is important to update your policies and Employee Handbook at least annually.
Employers are encouraged to review their policies on obtaining and utilizing investigative consumer reports, as well as on the regulations that govern taking adverse employment actions based on such investigations.
Written and Published By Arthur D. Rutkowski.
Rutkowski & Associates, Inc.
Employment Law Update
Bowers Harrison, LLP
25 N.W. Riverside Dr.
P.O. Box 1287
Evansville, IN 47706-1287