The Consumer Financial Protection Bureau (CFPB) has taken over enforcement of
the Fair Credit Reporting Act (FCRA) from the Federal Trade Commission (FTC).
As a result, beginning Jan. 1, 2013, employers must use updated Fair Credit
Reporting Act (FCRA) notices to reflect the change.
In 2011, after the passage of the Dodd-Frank Wall Street Reform and
Consumer Financial Protection Act, the CFPB was created and given the
responsibility of overseeing the regulations governing the FCRA. Shortly after,
the CFPB issued new regulations which, among other things, modified the Summary of Your
Rights under the Fair Credit Reporting Act form that employers must
use to notify employees and applicants of their rights. There are no
substantive changes to the form, other than the replacement of “FTC” with
The FCRA regulates employers who use third party organizations to conduct
background investigations prior to or during employment. According to the FCRA,
before an employer may conduct a background investigation, the employer must
obtain consent, in writing, from the applicant or employee, and must provide
certain information including the reason for the investigation. After the
report is obtained, the FCRA requires employers to take additional steps when
any adverse employment action is taken, such as refusing to hire an applicant or
terminating an employee’s position because of information obtained in the
report. For example, prior to taking adverse action, employers must provide the
applicant or employee with a copy of the background report and a summary of the
individual’s rights under the FCRA. After taking adverse action, the employer
is required to provide, in writing, a second notice with information about the
third party agency that provided the background information.
For additional information on the new CFPB, visit www.consumerfinance.gov.