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Case Study: Importance of the Disclosure and Authorization Form Format
The Regulators - Consumer Financial Protection Bureau (CFPB), Federal Trade Commission (FTC) and Equal Employment Opportunity Commission (EEOC) all enforce the Fair Credit Reporting Act (FCRA) and there are more claims than ever against employers (End Users) in regards to employee background checks. One area they are currently focusing on is the proper use of Disclosure and Authorization Forms.
Employers that have made alterations to the sample Disclosure and Authorization Form have found out the fines can add up. A claim against an employer could become very costly; $100-$1,000 per violation plus punitive damages. 15 USC § 1681n - Civil liability for willful noncompliance. Verifying altered sample Disclosure and Authorization Forms with your attorney for FCRA compliance will result in clear audit findings and reduced risk of litigation.
Per the FCRA it states in Section 604(b)(2)(A):
(2) Disclosure to consumer
(A) In general
Except as provided in subparagraph (B), a person may not procure a consumer report, or cause a consumer report to be procured, for employment purposes with respect to any consumer, unless:
(i) a clear and conspicuous disclosure has been made in writing to the consumer at any time before the report is procured or caused to be procured, in a document that consists solely of the disclosure, that a consumer report may be obtained for employment purposes; and
(ii) the consumer has authorized in writing (which authorization may be made on the document referred to in clause (i)) the procurement of the report by that person.
What does this mean for the employer? If any changes are made to the forms, have your attorney review the changes.
TIP: Do not hide the Disclosure and Authorization Form within the application; instead, keep it as a stand-alone document. The awareness of Section 604(b) of the FCRA will keep employers in compliance when conducting employee background checks. Eide Bailly offers sample Disclosure and Authorization Forms for clients to use, these forms were created by our attorney and meet FCRA guidelines. Any changes made to the form could change the meaning of the form and may not be in compliance with the FCRA.
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