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.
