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Feds Require New Form When Conducting Background Checks

Labor & Employment Law Alert Michael Aldana, Lindsey W. Davis

The Federal Fair Credit Reporting Act ("FCRA") imposes a number of requirements on employers who obtain background checks of employees and applicants through background checking or consumer reporting agencies. One of these requirements is that employers and consumer reporting agencies provide a "Summary of Consumer Rights" form when issuing a "pre-adverse action letter" and in certain other situations. With the responsibility for enforcing FCRA shifting from the Federal Trade Commission ("FTC") to the newly created Consumer Financial Protection Bureau ("CFPB"), an updated Summary of Rights form has been developed.

After January 1, 2013, employers must provide this updated form to employees and applicants. The primary changes in the form reflect the fact that the CFPB is now enforcing this law rather than the FTC. The updated form provides contact information for the CFPB. Employers who willfully or negligently fail to comply with any of the requirements set forth under FCRA, including the requirement to supply the most up-to-date Summary of Consumer Rights form, may face lawsuits brought by either current employees or applicants. Violations of the FCRA can result in penalties to the employer or damages for the affected applicant or employee.

A copy of the updated Summary of Consumer Rights form can be found here (Appendix K of 12 CFR 1022).

If you have any questions regarding the changes to the Summary of Consumer Rights form or the employer requirements under the FCRA, please contact Michael Aldana at (414) 277-5151 / michael.aldana@quarles.com or Lindsey Davis at 414) 277-3073 / lindsey.davis@quarles.com.