On September 12, 2018, the federal Consumer Financial Protection Bureau (“CFPB”) released two new model disclosure forms. They are to be used any time a credit check or other background check is being requested about any person (aka "consumer"), whether they are an applicant for employment or not.
The forms are intended to protect consumers against identity theft and employment discrimination. Employers and background check companies must update their forms no later than September 21, 2018, to ensure full compliance.
In May, 2018, Congress passed the Economic Growth, Regulatory Relief, and Consumer Protection Act (the "Act") in response to several, high-profile data breaches. Under the rules produced by the CFPB for implementing the new Act, anyone conducting a credit or background check must provide both forms to the consumer.
The first form, “A Summary of Consumer Identity Theft Rights,” informs consumers that they will have the right to obtain unlimited security freezes on their credit information, and provides information about how to do so.
The second form, “A Summary of Your Rights Under the Fair Credit Reporting Act,” provides a summary of the consumer’s rights to obtain and dispute information in consumer reports and to obtain credit scores.
Employers and background-check companies must begin using the new forms (or ones that contain all of the models’ key elements) by September 21, 2018. The model forms (in both English and Spanish) are available here: https://www.consumerfinance.gov/about-us/newsroom/bureau-consumer-financial-protection-issues-updated-fcra-model-disclosures/.
The new legislation also amends the Fair Credit Reporting Act (“FRCA”) to exclude from consumer reporting information certain medical debts incurred by veterans. Additionally, it establishes a new dispute process with respect to such medical debt.
Employers and background check companies have long been required by the FCRA and California law to provide specific information to employees and job applicants at certain times, so these new forms are just the latest requirement. A failure to provide correct notifications can lead to significant exposure, including class-action litigation.
Companies should seek advice from their legal counsel to ensure their forms comply with the new rules.
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DISCLAIMER: This article is a general summary and discussion of some of the more recent developments affecting business interests. This information is not intended to provide legal opinions or to substitute for the advice of legal counsel, and should not be relied upon as an opinion of the author regarding any specific matter. Instead, please contact LightGabler for additional information.