Updated FCRA form deadline looming

Employers and background check providers, also called consumer reporting agencies (CRAs), must begin using the updated Fair Credit Reporting Act (FCRA) “A Summary of Your Rights Under the Fair Credit Reporting Act” notice form next month.

The notice, also called the “Summary of Consumer Rights,” must be given to job applicants and certain employees after credit and background checks, such as with every pre-adverse action notice.

Employers and CRAs should note that the mandatory compliance deadline for using the updated notice is March 20, 2024. However, the updated notice can be used now if they wish.

The Consumer Financial Protection Bureau (CFPB) published the updated version of the notice in March 2023.The CFPB’s changes include non-substantive revisions to correct contact information for various federal agencies.

The CFPB has provided versions of the updated form in English and Spanish here:

https://www.consumerfinance.gov/compliance/compliance-resources/other-applicable-requirements/fair-credit-reporting-act/model-forms-and-disclosures/

Adverse action procedures

The notice has an important role in procedures that are followed when information in a background check affects a job applicant or employee — especially if it’s a negative effect.

If an employer uses information revealed in a consumer report as the basis for taking an “adverse action,” which can include reassigning an employee, terminating an employee, or denying a promotion as well as not hiring an individual, then:

• Before the employer takes the adverse action, the employer must give the individual a pre-adverse action disclosure that includes a copy of the individual’s consumer report and a copy of “A Summary of Your Rights Under the Fair Credit Reporting Act.” This document is prescribed by the Federal Trade Commission, so it is important to use the correct version. The CRA that furnishes the individual’s report should provide the employer with the summary of consumer rights, and employers should make sure only the most recent version of the form is used after March 20, 2024.
• After the employer has taken an adverse action, the employer must give the individual notice — orally, in writing, or electronically — that the action has been taken. This is provided in an adverse action notice that must include:
  • The name, address, and phone number of the CRA that supplied the report;
  • A statement that the CRA that supplied the report did not make the decision to take the adverse action and cannot give specific reasons for it; and
  • A notice of the individual’s right to dispute the accuracy or completeness of any information the CRA furnished, and their right to an additional free consumer report from the CRA upon request within 60 days.

Key to remember: Employers should make sure that after March 20, 2024, the copy of “A Summary of Your Rights Under the Fair Credit Reporting Act” being given to applicants or employees is the version updated in March 2023.