FCRA Compliance Update: A New Summary of Rights Has Been Released

The Fair Credit Reporting Act, or FCRA, is one of the most significant pieces of legislation impacting background checks for potential employees. This legislation regulates background checks as a type of consumer report and seeks to rein in many problems that once afflicted the process. Overall, FCRA compliance has helped to create a more standardized and reliable method of reporting background checks. 

However, employers are obligated to ensure that they only use an FCRA-compliant. Ignorance of the law and its stipulations—such as obtaining an applicant's written consent for a background check—is no defense against violations. Businesses frequently face expensive litigation for even minor mistakes with the FCRA.

The "Summary of Your Rights" notice is one area where mistakes can be costly due to simple oversights. This summary lays out in plain language what rights job applicants have under the FCRA. These include the right to know what is in one's criminal record and dispute inaccuracies. You must provide this summary in your notice when you choose to take pre-adverse or adverse action against a candidate because of their background report.

Effective April 19, 2023, the Consumer Financial Protection Bureau released an updated version of the FCRA Summary of Rights. Employers must distribute the most accurate and up-to-date version of the Summary whenever they take adverse action. Providing an outdated version could mean noncompliance and the risk of a lawsuit or a costly settlement.

What changed in the new summary? Despite being the first update to the document since 2018, there were no substantial changes to the rights contained within the summary. Instead, this version is more of a clerical update. Some old CFPB contact information was updated, while defunct business categories were removed from the language. 

Overall, the summary content did not change meaningfully, but employers and reporting agencies must still ensure they update their forms. The CFPB has provided a grace period of about one year for all employers to comply with this new version. The deadline for compliance was March 20, 2024.

Discussing these updates with your provider is essential for companies that rely on online background check services. Some services will automate the adverse action process as a courtesy for employers—so you must be sure the updated Summary of Rights is a part of that effort. Otherwise, you could be liable for any violations without a specific indemnification from your provider.

For now, there are no other significant updates about FCRA compliance to know. Despite the largely minor updates to the Summary of Rights, incorporating it into your procedures is essential. Don't wait for the grace period to elapse before exploring how to update your procedures quickly and simply. Review and revise your policy, associated documents, and other elements to continue vetting candidates effectively.