New FCRA Forms Effective January 1, 2013

Employers who use consumer reporting agencies to screen applicants and employees are required to follow the federal Fair Credit Reporting Act (FCRA). Recent changes have shifted enforcement of the FCRA from the Federal Trade Commission (FTC) to the Consumer Financial Protection Bureau (CFPB). The CFPB has, in turn, issued regulations that modify the required FCRA notices.

The revised notice that is most important for employers is the Summary of Consumer Rights under the FCRA. This notice is required when an employer is considering not hiring an applicant or not retaining an employee based on a consumer report (a report where only data is searched), and before an employer obtains an investigative consumer report (a report based on person-to-person interviews). Most employers do only consumer reports, and, in that case, the notice is given along with a copy of the report as part of the pre-adverse action process. Employers are required to substitute the new form for the old beginning January 1, 2013. The biggest change to the notice is that consumers are now directed to the CFPB, rather than to the FTC.

The CFPB made similar changes to the notices that consumer reporting agencies must provide to users of their services. Members who use MSEC’s Pre-Employment Screening Service will soon be receiving the revised Notice to Users of Consumer Reports from us to satisfy this requirement. A new Notice to Furnishers of Information was also created that consumer reporting agencies must provide to certain furnishers of information in specific situations.

The CFPB originally issued the revised forms in December 2011, but had to re-issue them mid-November 2012 to correct typographical and other technical errors. The re-issued, revised forms are available here (www.gpo.gov) and here (Amazon – Federal Register Public Inspection). The forms should be on the CFPB website (www.consumerfinance.gov/) in the near future. With a new enforcing agency and heightened concern about consumer privacy, more changes that affect employers’ background screening processes may be expected. We will keep you updated.