Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, Congress transferred rule-making authority for the relevant portions of the Fair Credit Reporting Act (FCRA) from the Federal Trade Commission (FTC) to the Consumer Financial Protection Bureau (CFPB). Employers that use third parties to provide background check reports for hiring and other employment purposes must comply with FCRA, as well as any applicable state laws. Among other requirements, the FCRA mandates that employers using third party background checks provide applicants and employees with a notice of their rights under the FCRA in various situations, including: (i) prior to taking an adverse action against an individual based on his or her background check report; and (ii) in connection with the procurement of an investigative consumer report. Employers have historically used the FTC’s sample notice entitled “A Summary of Your Rights Under the Fair Credit Reporting Act” to help satisfy this requirement.
This past fall, the CFPB revised the FTC’s regulations and re-issued the FTC’s three notices to reflect the transfer of authority to the CFPB, as well as other administrative changes. Primarily, the CFPB changed the forms to reflect that consumers should now contact the CFPB or visit its website to obtain more information about their rights, as opposed to contacting the FTC. The new regulations required employers to start using the CFPB’s new notices (or forms substantially similar to them), in lieu of the notice from the FTC that they previously provided to applicants and employees to comply with the FCRA. A copy of these new notices were published as Appendices K, M, and N to the applicable CFPB regulations implementing this requirement (12 C.F.R. Part 1022), with the expectation that the CFPB would post a more user-friendly version of the notice on its website before January 1st.
However, more than a month past the deadline, the CFPB website listed in the new notices is not yet fully operational (its current bare bones website simply provides links to the FTC’s information), and it has yet to provide any user-friendly notices that employers can use. Because of this delay, the CFPB previously announced that employers could continue to use the old FTC forms during the continuing “transition.” With the official transition deadline still in flux, we recommend that employers start switching now to the CFPB’s new form to avoid any delays should the CFPB suddenly declare the transition period over. We have provided a user-friendly copy of the “Summary of Your Rights” notice here. Employers should use this form in the same way as the old form, providing it to applicants or employees when providing pre-adverse action letters or at other appropriate times.
Please do not hesitate to contact any of our attorneys if you have any questions regarding the new form, or if you have any questions about your organization’s background check obligations under either the FCRA or often more-restrictive state laws.