On September 21, 2018 employers will have to make changes to a form required by the Fair Credit Reporting Act (“FCRA”). Failure to comply with this new requirement could mean a class action lawsuit. Luckily, the change is fairly simple. Here is what you need to do.
As you are well aware, users of consumer credit reports (that includes employer assessing a job applicant's credit report) are generally required to provide the FCRA Summary of Rights prior to taking any employment adverse action based upon the use of a consumer report. 15 U.S.C. § 1681b(b)(3)(A) requires that: "in using a consumer report for employment purposes, before taking any adverse action based in whole or in part on the report, the person intending to take such adverse action shall provide to the consumer to whom the report relates..."
The new FCRA Summary of Rights form must include the following language:
Consumers Have The Right To Obtain A Security Freeze
You have a right to place a “security freeze” on your credit report, which will prohibit a consumer reporting agency from releasing information in your credit report without your express authorization. The security freeze is designed to prevent credit, loans, and services from being approved in your name without your consent. However, you should be aware that using a security freeze to take control over who gets access to the personal and financial information in your credit report may delay, interfere with, or prohibit the timely approval of any subsequent request or application you make regarding a new loan, credit, mortgage, or any other account involving the extension of credit.
As an alternative to a security freeze, you have the right to place an initial or extended fraud alert on your credit file at no cost. An initial fraud alert is a 1-year alert that is placed on a consumer’s credit file. Upon seeing a fraud alert display on a consumer’s credit file, a business is required to take steps to verify the consumer’s identity before extending new credit. If you are a victim of identity theft, you are entitled to an extended fraud alert, which is a fraud alert lasting 7 years.
A security freeze does not apply to a person or entity, or its affiliates, or collection agencies acting on behalf of the person or entity, with which you have an existing account that requests information in your credit report for the purposes of reviewing or collecting the account. Reviewing the account includes activities related to account maintenance, monitoring, credit line increases, and account upgrades and enhancements.
To minimize potential class-wide exposure, your outside general counsel should review and update your forms prior to September 21, 2018 to avoid any gaps in compliance with this new requirement.