Fair Credit Reporting Act

Written By ESR News Blog Editor Thomas Ahearn

On April 24, 2020, the United States Court of Appeals for the Ninth Circuit affirmed a district court’s summary judgment in the case of LUNA v. HANSEN AND ADKINS AUTO TRANSPORT, INC. and held that an employer does not violate the federal Fair Credit Reporting Act (FCRA) by providing an FCRA disclosure simultaneously with other employment materials, according to a copy of the opinion on the Ninth Circuit website.

Circuit Judges M. Margaret McKeown, Jerome Farris, and Barrington D. Parker, Jr. held that FCRA 15 U.S.C. § 1681b(b)(2)(A)(i) that forbids procurement of a consumer report for employment purposes unless “a clear and conspicuous disclosure has been made in writing to the consumer… in a document that consists solely of the disclosure” does not prohibit the presentation of the disclosure with other application materials.

“Leonard Luna joins a long line of litigants challenging aspects of the federal consumer credit report regime. His theory, however, is more novel than most: Luna contends an employer violates the Fair Credit Reporting Act (“FCRA”) by providing an FCRA disclosure simultaneously with other employment materials, and by failing to place an FCRA authorization on a standalone document,” Circuit Judge McKeown wrote in the opinion.

Plaintiff Leonard Luna is a former employee of Hansen & Adkins, a vehicle transportation business employing big rig truckers, mechanics, dispatchers, and support staff. His FCRA claim stems from a multi-form and multi-page Commercial Driver Employment Application that included notices and authorizations permitting Hansen & Adkins to retrieve safety history and driving records, and conduct drug tests and background checks.

Luna claimed Hansen & Adkins violated the FCRA by presenting the disclosure together with other application materials. Circuit Judge McKeown disagreed: This argument stretches the statute’s requirements beyond the limits of law and common sense. It is true that FCRA requires “that a disclosure form contain nothing more than the disclosure itself,” but no authority suggests that a disclosure must be distinct in time, as well.

Judge McKeown continued: Luna argues Hansen & Adkins also violated FCRA by failing to put the authorization in a clear and conspicuous, standalone document. This attempted wholesale importation of FCRA’s disclosure requirements runs aground on the statutory language, which provides only that a prospective employer must obtain the authorization “in writing.” 15 U.S.C. § 1681b(b)(2)(A)(ii).

She concluded: Compare 15 U.S.C. § 1681b(b)(2)(A)(ii) with 15 U.S.C. § 1681b(b)(2)(A)(I). “[T]he authorization form is not relevant to the disclosure form standard set forth in the statute where, as here, the authorization is not included in the Disclosure.” As FCRA dictates only that a consumer authorization be “in writing,” without specifying its format, Hansen & Adkins’s authorization conformed to the requirements of the statute.

Enacted in 1970, the FCRA promotes the accuracy, fairness, and privacy of consumer information contained in the files of consumer reporting agencies (CRAs). The FCRA was intended to protect consumers from the willful and/or negligent inclusion of inaccurate information in their credit reports, and regulates the collection, dissemination, and use of consumer information, including consumer credit information.

Employment Screening Resources® (ESR) – a leading global background check provider – offers background screening services that fully comply with the FCRA. ESR is accredited by the Professional Background Screening Association (PBSA) and undergoes annual SOC 2 audits. In 2019, ESR was named one of the top background screening firms by HRO Today Magazine. To learn more about ESR, visit www.esrcheck.com.

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