Thursday, September 20, 2018

Summary of FCRA Rights Issued by CFPB for Amended Identity Theft Rights


In May, Congress amended the Fair Credit Reporting Act to, among other things, provide for a year-long credit freeze (and notice of consumer rights for a credit freeze) for victims of identity theft.   Earlier this month, the CFPB issued an interim final rule and new forms which consumer reporting agencies (CRAs) and employers should use, starting tomorrow, including a new Summary of Your Rights under the Fair Credit Reporting Act (the “Summary of Rights”).  The CFPB is giving CRAs and employers alternatives to complying with the amended FCRA and is asking for public comments on the new forms and interim rule.   While the new credit freeze rules do not apply to many consumer reports, including those obtained for employment and tenant background checks, many entities – including employers – are required to provide the Summary of Rights as amended by the statute.

The new statute – the Economic Growth, Regulatory Relief and Consumer Protection Act  --  requires CRAs to provide the summary of credit freeze rights to consumers who provide notice of identity theft.  However, it also requires the CFPB to amend the Summary of Rights, which has not been updated since 2012.   The Act does NOT require a credit freeze when the consumer report is requested in connection with employment or tenant, or background screening purposes.  15 U.S.C. §1681c-1(i)(4)(I).   Nonetheless, employers remain obligated to provide the Summary of Rights, as they have long been required, before making an adverse determination based on information from a consumer report.

The CFPB is permitting affected parties to continue using the 2012 forms as long as a new notice about credit freeze rights is also included or to begin using the new Summary of Rights form (which has incorporated the new credit freeze rights information).    Some management attorneys have asserted that employers are not required to use the new notice about credit freezes because the new statute only applies to CRAs and the freeze rights do not apply to consumer reports obtained for employment.  Nonetheless, they recognize that class action plaintiff attorneys are likely to bring suit against employers which do not use the new forms, making it cheaper to comply than to fight the new requirement.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can be changed or amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney