Reminder: Deadline to Use Updated Fair Credit Reporting Act Summary Approaches

In March 2023, the Consumer Financial Protection Bureau (CFPB) published an updated version of a required notice under the Fair Credit Reporting Act (FCRA). Employers must give this notice, “A Summary of Your Rights Under the Fair Credit Reporting Act” (Summary), to job applicants and certain employees after credit and background checks. For the most part, companies should provide the Summary with every pre-adverse action notice. Markedly, the updated notice replaces the current version published in October 2018. Employers had roughly a year to update their required postings to reflect the changes. Basically, the CFPB wants to remind employers to use the updated Summary beginning in late March 2024. In April 2023, the CFPB issued a joint statement with the Equal Employment Opportunity Commission, the Department of Justice, and the Federal Trade Commission on artificial intelligence and automated systems discrimination.

Rights Under the Fair Credit Reporting Act

Specifically, the FCRA governs the access to consumer credit report records. Additionally, the FCRA allows individuals to verify the accuracy of such reports. In the employment realm, the FCRA often applies during interviewing, hiring, and background checks. When employers use third-party consumer reports during pre-employment background checks, they must equally comply with the FCRA. The FCRA also protects information collected by consumer reporting agencies. FCRA consumer reports may contain the following information about an applicant or job candidate:

• creditworthiness and standing,
• criminal history reports,
• driving records, and
• general reputation and character.

Unquestionably, the FCRA restricts access to this information to parties with a purpose specified under the law. Furthermore, employers that use any information the FCRA covers must notify the employee in writing that they will use it. Employers must also provide notification when they take an adverse action based on information in a report. In addition, several other provisions in the FCRA relate to record accuracy and identity theft. Finally, under the FCRA, individuals have the right to obtain a copy of their consumer report and dispute any information.

Updates to Summary of Your Rights Under the Fair Credit Reporting Act

Changes to the Summary include important corrections to contact information for federal agencies. Additionally, the revised notice provides updated references to obsolete business types and other technical corrections. Employers must provide the updated notice to applicants and employees along with any pre-adverse action notice based on a finding in a background check. The revised notice’s English and Spanish versions are available on the CFPB’s website.

Employer Takeaways

In conclusion, as discussed earlier, the CFPB wants to remind employers to update their current Summary notice by March 20th, 2024. Conversely, businesses not using the new form beginning March 20 could face costly FCRA violations and litigation procedures. Therefore, employers should take this opportunity to review background check policies and procedures for compliance with the FCRA. Finally, “A Summary of Your Rights Under the Fair Credit Reporting Act” notice is only one of the required resources or labor law posters businesses must provide. Employers should review their workplace policies and procedures to comply with federal and state posting requirements.