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Ring in the New Year With a New FCRA Summary of Rights Form

December 6, 2012

Employers that utilize a third party to obtain background information on applicants and employees, such as a criminal background check or a credit check, must provide applicants/employees with a new version of the Form Summary of Rights Notice prior to taking any adverse action based on the contents of that report. This notice requirement under the Fair Credit Reporting Act (FCRA) is not new: the contents of the form Summary of Rights has changed to reflect the fact that the Consumer Financial Protection Bureau (CFPB) has assumed rulemaking authority for the FCRA from the Federal Trade Commission (FTC). A copy of the new form is set forth in Appendix K of 12 C.F.R. Part 1022.

The new Summary of Rights form is the result of a change contained in the Dodd-Frank Wall Street Reform and Consumer Protection Act, which transferred rulemaking authority for the FCRA from the FTC to the CFPB. The new Summary of Rights form issued by the CFPB removes references to the FTC and directs recipients to the CFPB for more information.

The FCRA applies when an employer utilizes a third party to prepare a “consumer report” or “investigative consumer report,” such as a credit report or criminal background check. In those situations, the employer must give a written disclosure to the applicant/employee and obtain his or her written consent. The FCRA consent must be a stand-alone document. The FCRA also requires employers to provide an applicant/employee with a copy of the consumer report and the Summary of Rights Notice at least five business days before taking adverse action, based in whole or in part on such a report. It is important for employers that obtain “credit reports” or “investigative credit reports” prepared by third parties to dispose of the old FTC notice and to replace it with the new CFPB notice on January 1, 2013.

For more information on employer obligations under the Fair Credit Reporting Act, please contact: