Scarinci Hollenbeck, LLC, LLCScarinci Hollenbeck, LLC, LLC

Firm Insights

Employers Must Use Updated Summary of Rights Under Fair Credit Reporting Act

Author: Scarinci Hollenbeck, LLC

Date: November 2, 2018

Key Contacts

Back

The Consumer Financial Protection Bureau (CFPB) Recently Published an Updated “Summary of Your Rights” Form

New York and New Jersey employers that conduct background checks should be sure to update their forms. Effective September 21, 2018, the Consumer Financial Protection Bureau (CFPB) published an updated “Summary of Your Rights” form, which is required under the federal Fair Credit Reporting Act (FCRA).

Updated Summary of Rights Under Fair Credit Reporting Act
Photo courtesy of Lubomyr Myronyuk (Unsplash.com)

FCRA Notice and Disclosure Requirements

The FCRA, which applies when employers obtain background check information from third-party consumer reporting agencies, imposes strict notice and disclosure requirements on employers. It requires employers to notify job applicants and employees that they might use information in their consumer report for decisions related to their employment. The FCRA also requires employers to obtain written authorization to obtain the reports. This written disclosure must be in a stand-alone format separate from the job application and not contain any other content, although it may be contained with the authorization. 

When employers obtain an “investigative report,” a report based on personal interviews concerning a person’s character, general reputation, personal characteristics, and lifestyle, they must also tell the applicant or employee of his or her right to a description of the nature and scope of the investigation. In addition, employers are required to provide a copy of “A Summary of Your Rights Under the Fair Credit Reporting Act.”

When taking an adverse action, such as not hiring an applicant or terminating an employee, based on background information obtained through consumer reporting agency, the FCRA has additional requirements. Prior to taking the employment action, the employer must give the applicant or employee a notice that includes a copy of the consumer report relied upon in making the decision and a copy of “A Summary of Your Rights Under the Fair Credit Reporting Act.”

After employers take an adverse employment action, they must tell the applicant or employee (orally, in writing, or electronically): that he or she was rejected because of information in the report; the name, address, and phone number of the company that sold the report; that the company selling the report didn’t make the hiring decision, and can’t give specific reasons for it; that he or she has a right to dispute the accuracy or completeness of the report, and to get an additional free report from the reporting company within 60 days.

Amended Summary of Your Rights Form

The CFPB has revised the model form to reflect amendments to the FCRA. In May, Congress passed the Economic Growth, Regulatory Relief, and Consumer Protection Act, which requires nationwide consumer reporting agencies to provide “national security freezes” free of charge to consumers. The new legislation also mandates that whenever the FCRA requires a consumer to receive either the Summary of Consumer Rights or the Summary of Consumer Identity Theft Rights, a notice regarding the new security freeze right also must be included.

The Economic Growth, Regulatory Relief, and Consumer Protection Act also extends the minimum time that nationwide consumer reporting agencies must include an initial fraud alert in a consumer’s file from 90 days to one year. A fraud alert informs a prospective lender that a consumer may have been a victim of identity theft and requires that the lender take steps to verify the identity of anyone seeking credit in the consumer’s name.

The revised Summary of Your Rights form, which is available here, includes the above changes to the FCRA. To mitigate the impact of these changes on users of the existing model forms, the CFPB’s interim final rule provides that the Bureau will regard the use of the old model forms (dated November 14, 2012) to constitute compliance with the FCRA, so long as a separate page that contains the additional required information is provided in the same transmittal. 

Key Takeaway for New York and New Jersey Employers

The FCRA has consistently been a litigation trap for unwary businesses. Given that the improper use or non-use of the Summary of Rights form has been the subject of class-action lawsuits, employers should verify that they are using the correct version of the form or providing the new information now required under the FCRA.

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Scarinci Hollenbeck, LLC, LLC

Related Posts

See all
Corporate Transactions: Best Practices for Successful Deals post image

Corporate Transactions: Best Practices for Successful Deals

Corporate transactions can have significant implications for a corporation and its stakeholders. For deals to be successful, companies must act strategically to maximize value and minimize risk. It is also important to fully understand the legal and financial ramifications of corporate transactions, both in the near and long term. Understanding Corporate Transactions The term “corporate […]

Author: Dan Brecher

Link to post with title - "Corporate Transactions: Best Practices for Successful Deals"
How to Conduct a Fair and Legal Employee Termination in 2025 post image

How to Conduct a Fair and Legal Employee Termination in 2025

Ongoing economic uncertainty is forcing many companies to make tough decisions, which includes lowering staff levels. The legal landscape on both the state and federal level also continues to evolve, especially with significant changes to the priorities of the Equal Employment Opportunity Commission (“EEOC”) under the Trump Administration. Terminating an employee is one of the […]

Author: Angela A. Turiano

Link to post with title - "How to Conduct a Fair and Legal Employee Termination in 2025"
Admin Dissolution for Annual Report: What You Need to Know post image

Admin Dissolution for Annual Report: What You Need to Know

While filing annual reports may seem like a nuisance, failing to do so can have significant ramifications. These include fines, reputational harm, and interruption of your business operations. In basic terms, “admin dissolution for annual report” means that a company is dissolved by the government. This happens because it failed to submit its annual report […]

Author: Dan Brecher

Link to post with title - "Admin Dissolution for Annual Report: What You Need to Know"
What Is Antitrust Litigation Law? post image

What Is Antitrust Litigation Law?

Antitrust laws are designed to ensure that businesses compete fairly. There are three federal antitrust laws that businesses must navigate. These include the Sherman Act, the Federal Trade Commission Act, and the Clayton Act. States also have their own antitrust regimes. These may vary from federal regulations. Understanding antitrust litigation helps businesses navigate these complex […]

Author: Robert E. Levy

Link to post with title - "What Is Antitrust Litigation Law?"
Dissolving Your Business: Essential Legal Steps to Protect Your Interests post image

Dissolving Your Business: Essential Legal Steps to Protect Your Interests

If you’re considering closing your business, it’s crucial to understand that simply shutting your doors does not end your legal obligations. Unless you formally dissolve your business, it continues to exist in the eyes of the law—leaving you exposed to ongoing liabilities such as taxes, compliance violations, and potential lawsuits. Dissolving a business can seem […]

Author: Christopher D. Warren

Link to post with title - "Dissolving Your Business: Essential Legal Steps to Protect Your Interests"
The Role of Corporate Restructuring in Mergers & Acquisitions post image

The Role of Corporate Restructuring in Mergers & Acquisitions

Contrary to what many people think, corporate restructuring isn’t all doom and gloom. Revamping a company’s organizational structure, corporate hierarchy, or operations procedures can help keep your business competitive. This is particularly true during challenging times. Corporate restructuring plays a critical role in modern business strategy. It helps companies adapt quickly to market changes. Following […]

Author: Dan Brecher

Link to post with title - "The Role of Corporate Restructuring in Mergers & Acquisitions"

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Sign up to get the latest from our attorneys!

Explore What Matters Most to You.

Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.

Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.

Let`s get in touch!

* The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!