In September of 2018, the Consumer Financial Protection Bureau of the United States issued an update of the Agency’s model Federal Fair Credit Reporting Act notice which must be provided to applicants and employees that are subject to a background check undertaken by an outside party on behalf of an employer. Applicants and employees need to be advised of their rights under the Fair Credit Reporting Act, where adverse action is to be taken against the applicant or the employee.  Failure to do so may result in financial liability to the employer.  A copy of the form that employers must now use is accessible at https://www.consumer.ftc.gov/articles/pdf-0096-fair-credit-reporting-act.pdf, and the old form should be destroyed.  The new form now includes information on the individual’s right to get a security freeze for fraud on their “credit report.”

Significantly, there are additional requirements to be followed when employers seek to take adverse action, besides providing a notice of the applicant’s or employee’s rights, including providing a copy of the consumer investigative report being relied upon by the employer and an opportunity for the applicant or employee to dispute the information contained in the report. Also, no background check can be performed for the employer by an outside party without the applicant’s or the employee’s prior written authorization.

If you have any questions on the Fair Credit Reporting Act, please feel free to contact us.