Beginning January 1, 2013, Employers Must Use a New Summary of Consumer Rights to Comply with the Fair Credit Reporting Act

The Fair Credit Reporting Act (FCRA) is the federal law regulating, among other things, background checks that employers conduct on applicants for employment and employees. Employers who use third parties to provide background reports on employees or potential employees know that they must make certain disclosures before taking any adverse action based in whole or in part on the results of the third party’s background check. Generally, the employer must provide the employee or applicant with a copy of the background check report and a statement summarizing the individual’s rights under the FCRA.

Prior to the Dodd-Frank Act, the Federal Trade Commission was responsible for administering the FCRA. Now, the newly created Consumer Financial Protection Board (CFPB) is responsible for rule making under the FCRA. The CFPB issued regulations calling for the use of a new Summary of Consumer Rights form. The new form is slightly different from the form published by the Federal Trade Commission. Employers may continue to use the Federal Trade Commission version of the form through December 31, 2012. Thereafter, employers must use the CFPB’s version of the Summary of Consumer Rights under the FCRA form. A link to the new Summary of Consumer Rights Under the FCRA is provided for your reference. Employers taking adverse actions after January 1, 2013 based upon the results of a background check should be sure to use the CFPB’s new form Summary of Consumer Rights under the FCRA.