According to regulations from the Consumer Financial Protection Bureau (CFPB), three essential forms mandated by the federal Fair Credit Reporting Act (FCRA) used in the background screening process must be modified by January 1, 2013. The forms must be changed to reflect that consumers can obtain information about their rights under the FCRA from the CFPB instead of the Federal Trade Commission (FTC). The three forms in use currently indicate that the FTC is the agency consumers can contact with questions. The regulation with the original revised forms is available online here. For more current CFPB forms, read the ESR News blog ‘Consumer Financial Protection Bureau Announces New Corrected Forms Required by FCRA for Background Checks Starting January 1 2013’.
The three forms at issue are:
- Summary of Consumer Rights under the FCRA
- Notice to Users of Consumer Reports of their Obligations under the FCRA
- Notice to Furnishers of Information of their Obligations under the FCRA
Each of the three notices is mandated for use in certain situations under the Fair Credit Reporting Act:
- The “Summary of Consumer Rights under the FCRA” is a notice that a background screening firm must provide to an employer and employers in turn must provide the notice to applicants in different situations.
- The FCRA also mandates that a background screening firm (known as a Consumer Reporting Agency or “CRA”) must provide each user of its services the “Notice to Users of Consumer Reports of their Obligations under the FCRA.”
- The “Notice to Furnishers of Information of their Obligations under the FCRA” is aimed at certain furnishers of information to CRAs and must be provided in prescribed situations such as a re-investigation where the consumer disputes the report or in a situation involving identity theft.
The changes are the result of the creation of the CFPB as part of the Dodd–Frank Wall Street Reform and Consumer Protection Act (Pub.L. 111-203, H.R. 4173) that was signed into law by President Barack Obama on July 21, 2010. The CFPB has rule making and enforcement powers over the FCRA. However, the CFPB does not have supervisory power over background screening firms. Congress specifically exempted background screening firms from being supervised by the CFPB since a background check report is not a financial product. The result may be some confusion as the CFPB and FTC determine which agency will perform which tasks.
The current FTC versions of the three forms are published as appendixes to regulations posted at http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&tpl=/ecfrbrowse/Title16/16cfr698_main_02.tpl. The primary difference is that instead of listing the FTC contact information, the CFPB contact information is utilized in the form.
This change underscores that background screening is a complex professional endeavor that is increasingly subject to regulation, litigation, and legislation on both the state and federal level. Employers need to carefully select a background screening firm that has an understanding of these regulatory complexities, especially given the increase in class action lawsuits and governmental investigations.
For more information about background checks, visit Employment Screening Resources (ESR) – ‘The Background Check Authority’ and a nationwide background screening firm accredited by The National Association of Professional Background Screeners (NAPBS®) – at http://www.esrcheck.com/, call 415.898.0044, or email email@example.com.
Lester S. Rosen is an Attorney at Law and CEO of Employment Screening Resources (ESR)
About Employment Screening Resources (ESR):
Employment Screening Resources (ESR) – ‘The Background Check AuthoritySM’– provides accurate and actionable information, empowering employers to make informed safe hiring decisions for the benefit for our clients, their employees, and the public. ESR literally wrote the book on background screening with “The Safe Hiring Manual” by Founder and CEO Lester Rosen. ESR is accredited by The National Association of Professional Background Screeners (NAPBS), a distinction held by a small percentage of screening firms. By choosing an accredited screening firm like ESR, employers know they have selected an agency that meets the highest industry standards. For more information about Employment Screening Resources (ESR), visit http://www.esrcheck.com/, call 415.898.0044 or 888.999.4474 (Toll Free), or email firstname.lastname@example.org.
About ESR News:
The Employment Screening Resources (ESR) News blog – ESR News – provides employment screening information for employers, recruiters, and jobseekers on a variety of topics including credit reports, criminal records, data privacy, discrimination, E-Verify, jobs reports, legal updates, negligent hiring, workplace violence, and use of search engines and social network sites for background checks. For more information about ESR News or to send comments or questions, please email ESR News Editor Thomas Ahearn at email@example.com.