In 2011, the newly created Consumer Financial Protection Bureau became the primary agency responsible for enforcing the Fair Credit Reporting Act (FCRA), replacing the Federal Trade Commission (FTC) in that role.  The FCRA governs the creation and use of consumer reports, which many employers obtain from consumer reporting agencies in connection with background checks in the hiring process. 

Generally, under the FCRA, the two types of reports that are of concern to employers are consumer reports and investigative consumer reports.  A consumer report is a report by a consumer reporting agency concerning the individual's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living.  An investigative consumer report is a special type of report in which information about the individual's character, general reputation, personal characteristics, and mode of living is obtained through personal interviews.

The Bureau recently issued three new forms that must be used, beginning January 1, 2013, in connection with the creation and use of consumer reports. The new forms are entitled: (a) A Summary of Your Rights Under the Fair Credit Reporting Act; (b) Notice to Furnishers of Information: Obligations of Furnishers under the FCRA; and (c) Notice to Users of Consumer Reports: Obligations of Users Under the FCRA.

The Summary of Rights is the form that is of primary importance to employers because that form must be provided by employers to applicants in response to their requests for such summary in connection with obtaining an investigative consumer report, or prior to taking an adverse employment action based on a consumer report.  The other two forms are forms provided by consumer reporting agencies to employers who use their services.  Generally, there are no substantive changes to the forms other than the replacement of references to the FTC with references to the Bureau and a statement directing individuals to the Bureau's website for more information.

The new forms are appendices K, M, and N to 12 CFR Part 1022 and may also be accessed by the following link: click here.

Please do not hesitate to contact us if you have questions about the FCRA or other issues involving employee background checks.