Excerpted from a McDermott Will & Emery Blog by Marjorie C. Soto Garcia and Cristell Fortune
The Consumer Financial Protection Bureau (CFPB) recently released an updated version of the “A Summary of Your Rights Under the Fair Credit Reporting Act” notice to job applicants and employees required in connection with conducting employment background checks (also known as the Summary of Consumer Rights).
Starting on March 20, 2024, employers and consumer reporting agencies (third-party background check vendors) will need to provide the newly revised Summary of Consumer Rights to applicants and employees in connection with background checks to comply with the federal Fair Credit Reporting Act.
The CFPB is an independent bureau within the Federal Reserve System that empowers consumers with the information they need to make financial decisions in the best interests of them and their families. It works in conjunction with the Federal Trade Commission to enforce the Fair Credit Reporting Act (FCRA).
The FCRA governs access to consumer credit report records and promotes accuracy, fairness and the privacy of personal information assembled by credit reporting agencies. The FCRA also establishes specific notice requirements for employers seeking to obtain pre-hire and employment background checks.
An employer who violates the FCRA, including by failing to provide a compliant Summary of Consumer Rights form, may be investigated by the Federal Trade Commission (FTC). Such an employer may face statutory damages ranging from $100 to $1,000 per violation. In addition, the employer may be liable for actual damages, attorney fees and court costs.
CFPB’S UPDATES TO THE FCRA SUMMARY OF RIGHTS
On March 17, 2023, the CFPB released an updated version of the model “Summary of Consumer Rights,” notice, replacing the October 2018 edition that the majority of employers and background check vendors are currently using. The CFPB’s updates include changes to the contact information for various federal agencies included on the form, including the CFPB, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation and the National Credit Union Administration.
The CFPB’s updates also include non-substantive technical corrections, such as updates to formatting. Lastly, the revised Summary of Consumer Rights removes references to financial institutions that are obsolete, such as the Federal Land Banks, Federal Land Bank Associations, Federal Intermediate Credit Banks and Production Credit Associations.
The Summary of Consumer Rights are available here.
COMPLIANCE STRATEGIES AND NEXT STEPS
The final rule enacting this change is set to take effect on April 10, 2023, and employers and consumer reporting agencies will need to begin using the updated form by March 20, 2024. However, employers may want to hold on immediately updating their Summary of Consumer Rights notices at this time and continue to monitor anticipated additional comments and corrections to the Summary of Consumer Rights notice that may be forthcoming.
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