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Employers Must Use New FCRA Notice by January 1, 2013

Volume 11, Issue 10
December 20, 2012

Employers who utilize third party vendors to gather and provide information as part of their background check process will be required to use the new Summary of Your Rights Under the Fair Credit Reporting Act notice starting on January 1, 2013 when issuing a pre-adverse action letter and in certain other situations.  The new notice is one of three modified forms utilized in complying with the Fair Credit Reporting Act (FCRA).  Enforcement of the FCRA recently switched from the Federal Trade Commission (FTC) to the newly created Consumer Financial Protection Bureau (CFPB).  The other two other commonly used forms modified by the CFPB are the Notice to Furnishers of Information: Obligations of Furnishers under the FCRA and the Notice to Users of Consumer Reports: Obligations of Users under the FCRA.  All three revised forms do not contain substantive changes.  Rather the primary goal behind the changes is to alert the public to the CFPB's new enforcement role. Given the FCRA's complex and changing regulatory framework, employers should keep up to date on the FCRA's requirements and watch for new CFPB rulemaking and enforcement efforts.  Employers that negligently or willfully fail to comply with the FCRA's requirements can be subject to civil liability in lawsuits by disgruntled applicants and/or employees.  Negligent acts can result in the award of actual damages and attorney's fees, while willful acts can result in statutory damages, attorney's fees and punitive damages.  If you have questions concerning your company's obligations under the FCRA, please contact one of the lawyers at KZA for more information.

Employer Report articles are for general information only; they are not intended and should not be construed to be legal advice. Reading or replying to such articles does not establish an attorney-client relationship. In addition, because the subject matters and applicable laws discussed in Employer Report articles are often in a state of change and not always applicable to every type of business entity or organization, readers should consult with counsel before making decisions based on the same.