Global HR Research is committed to keeping our clients up with changes in litigation and protocol in the HR industry. Recently, GHRR was advised by our legal counsel that the Consumer Financial Protection Board (CFPB) issued new regulations that call for the modification of three forms required by the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et. seq. These forms are generally used by consumer reporting agencies during the background screening process. CRAs and employers are expected to use these new forms beginning January 1, 2013. Specifically, the CFPB has modified three (3) forms to make it clear to consumer reporting agencies and customers alike that the Federal Trade Commission (FTC) is no longer the agency from which consumers may obtain information about their rights under the FCRA. The CFPB will now be the regulation agency for FCRA requirements.
The Dodd- Frank Wall Street Reform and Consumer Protection Act (Pub. L. 111-203, H.R. 4173), which was signed by President Obama on July 21, 2010, transferred rulemaking authority for the FCRA to the CFPB. The newly created CFPB has not become the agency primarily responsible for interpreting the FCRA.
The regulations mandate that the following three (3) forms be modified:
1) Summary of Consumer Rights under the FCRA:
This is a standard notice required under the FCRA to be used by CRAs and employers alike. CRAs must provide this form to employers. Employer must then provide this form to applicants and employees in a wide variety of situations, such as when the applicant or employee will be subject to an investigative consumer report or when a pre-adverse action notice is sent to an applicant or employee.
2) Notice to Users of Consumer Reports of their Obligations under the FCRA:
The FCRA requires that CRAs provide each user, including their employer clients, with a copy of this notice.
3) Notice to Furnishers of Information of their Obligations under the FCRA:
The FCRA required that CRAs provide this notice to certain furnishers of information in specific situations.
As previously mentioned, the main different between the forms is that they indicate that consumers may now obtain information about their rights under the FCRA from the CFPB, instead of the FTC. Furthermore, despite that the CFPB has rulemaking and enforcement powers over the FCRA, it does not definitely supervise CRAs. However, in July 2012, the CFPB adopted a rule which states that it may supervise some CRAs that are considered “larger participants” or hold more than $7 million in annual receipts from consumer reporting activities.
Given this complex shift in regulation and due to increased regulation at local, state and federal levels, as well as an increase in litigation surround the FCRA, employers and CRAs have been advised to keep up-to-date with the FCRA’s requirements and the CFP’s rule making and enforce these new requirements, including but not limited to, using the new forms no later than January 1, 2013.
** This publication has been comprised from information provided by Seyfath Shaw LLP. It should not be considered legal advice or a legal opinion on any specific facts or circumstances. The contents are intended for general information only.
