The New FCRA Form for Pre-Employment Background Checks
Many employers have begun to routinely utilize third party credit agencies that are geared toward pre-employment screening. This has been made a requirement because of the recent changes that have been imposed by the Fair Credit Reporting Act (FCRA).
What does this mean for employers?
Starting on September 21st, 2018, employers who make use of background checks will be required to inform job applicants and their employees of their rights under the FCRA using the new Summary of Consumer Rights form. If they are unable to avail the appropriate notification, it may expose employers to legal associated risks, for example, class action litigation.
What is the Summary of Consumer Rights?
The Summary of Consumer Rights mandates that the employers must provide a notification before asking for a background check. This would include personal discussion and interviews held by the consumer reporting agency.
What changes have been made?
One of the primary changes includes the ‘National Security Freeze’ disclosure within the FCRA form. This change enables the consumers for its right to obtain security freeze. The nationwide applicable ‘Economic Growth, Regulatory Relief and Consumer Protection Act’, passed by Congress in May 2018 requires consumers to be provided with cost free ‘national security freezes’ by consumer reporting agencies. It restricts and keeps the prospective lenders under control from securing consumer’s credit report and makes harder to open an unauthorized account by identity thieves.
Another change includes the ‘Fraud Alert’ disclosure that has extended the minimum time from 90 days to 365 days that the consumer reporting agencies should list in a consumer file the first time a fraud was alerted. This disclosure alerts the lenders that the prospective consumer may have been exposed to identity theft. It results in lenders taking effective and measurable steps to verify the identity of those who seeks for credit than the actual consumer.
Additional Information
According to FCRA, the Bureau needs to draft various model forms for these particular documents. The consumer agencies for reporting and other institutions can utilize the model of Bureaus to be able to form their own substantial forms. The law has also extended the minimum amount of time which must be included by all the agencies involved in consumer reporting on the original fraud alert on the file for the consumers starting with 90 days all the way to 1 Year.
In order to avoid liabilities in the future, the background check companies and employers will be necessitated to update their forms before a new rule is implemented come September 21st.
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