Review your FCRA Disclosure and Authorization process so your firm doesn’t wind up getting sued like Walmart.
This class action lawsuit RANDY Pitre vs Wal-Mart Stores Failure to follow FCRA alleges that Walmart violated provisions of the Fair Credit Reporting Act in not providing an adequate disclosure and failing to provide a summary of rights.
Any firm that receives a consumer report from a consumer reporting agency is governed by the rules of the FCRA. And yes, even though you might not be getting a credit report, any report from a consumer reporting agency is included. Our blog is peppered with many firms who have made similar mistakes. Your Consumer Reporting Agency should provide an easy means to comply. We have the technology to keep you out of trouble. Give us a call if you wish to discuss. Our on-line process is called QuickApp and provides an applicant all the required forms. The completed QuickApp is then maintained in the applicant’s record in our system. It is really quite simple.
FAILURE TO MAKE PROPER DISCLOSURE IN VIOLATION OF THE FCRA (15 U.S.C. §§ 1681 b(b)(2)(A))
Section 1681 a(d)(l) of the FCRA defines ·’consumer report” as any oral, or other communication of any information by a consumer reporting agency bearing on a consumer’s credit worthiness, credit standing, credit
capacity, character, general reputation, personal characteristics, or mode of living which is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer’s
eligibility” for employment purposes.
Section 168la(e) of the FCRA defines “investigative consumer report” as: a consumer report or portion thereof in which information on a consumer’s character, general reputation, personal characteristics, or mode of living is obtained through personal interviews with neighbors, friends, or associates of the consumer report on or with whom he is acquainted or who may have knowledge concerning any such items of information.
Thus any background investigation report qualifies as a consumer report.
Section 1681b(b) of the FCRA provides, in relevant part:
Conditions for furnishing and using consumer reports for employment purposes
(2) Disclosure to consumer
(A) In general
A person may not procure a consumer report, or cause a consumer report to be procured, for employment purposes with respect to any consumer, unless a clear and conspicuous disclosure has been made in writing to the consumer at any time before the report is procured or caused to be
procured, in a document that consists solely of the disclosure, that a consumer report may be obtained for employment purposes; and the consumer has authorized in writing (which authorization may be
made on the document referred to in clause (i)) the procurement of the report by that person. (Emphasis Added).
Section 1681 b(b)(2)(A)(i) requires that a clear and conspicuous disclosure be made in writing. Because DEFENDANTS’ disclosures do not meet the requirement of Section I 01 (c)(l) of 15 U.S.C. 7001, the disclosures do not satisfy the written requirement.
As described above, PLAINTIFF alleges, on information and belief, that in evaluating her and other class members for employment, DEFENDANTS procured or caused to be prepared credit and background reports (i.e., a consumer report and/or investigative consumer report, as defined by 15 U.S.C. § 168Ja(d)(l)(B) and 15 U.S.C. § 1681a(e)). The purported disclosures do not meet the requirements under the law because they are embedded with extraneous information, and are not clear and unambiguous disclosures in stand-alone documents.
Under the FCRA. it is unlawful to procure or caused to be procured, a consumer report or investigative consumer report for employment purposes unless the disclosure is made in a document that consists solely of the disclosure and the consumer has authorized, in writing, the procurement of the report. 15 U.S.C. § 1681 b(b)(2)(A)(i)-(ii). The inclusion of a release and other extraneous information, therefore, violates § I 681 b(b)(2)(A) of the FCRA.
Although the disclosure and the authorization may be combined in a single document, the Federal Trade Commission (“FTC”) has warned that the form should not include any extraneous information or be part of another document. For example, in response to an inquiry as to whether the disclosure may be set forth within an application for employment or whether it must be included in a separate document, the FTC stated:
The disclosure may not be part of an employment application because the language [of 15 U.S.C. § 1681 b(b)(2)(A) is] intended to ensure that it appears conspicuously in a document not encumbered by any other information. The reason for requiring that the disclosure be in a stand-alone document is to prevent consumers from being distracted by other information side-by-side within the disclosure.
In a report dated July 2011, the FTC reiterated that: “the notice [under 15 U.S.C §26 1681 b(b )(2)(A)] may not include extraneous or contradictory information, such as a request for a consumer’s waiver of his or her rights under the FCRA.”
By including extraneous information, DEFENDANTS -willfully disregarded the FTC’s regulatory guidance and violated Section 1681 b(b )(2)(A) of the FCRA. Additionally, the inclusion of the extraneous provisions causes the disclosure to fail to be “clear and conspicuous” and “clear and accurate,” and thus violates§§ 168lb(b)(2)(A) and 1681d(a).
FAILURE TO GIVE PROPER SUMMARY OF RIGHTS IN VIOLATION OF FCRA (15 U.S.C. § 168ld(a)(1) and 1681g(c))
Section 1681d provides:
(a) Disclosure of fact of preparation A person may not procure or cause to be prepared an investigative consumer report on any consumer unless-
it is clearly and accurately disclosed to the consumer that an investigative consumer report including information as to his character, general reputation, personal characteristics, and mode of living, whichever arc applicable, may be made, and such disclosure;
is made in a writing mailed, or otherwise delivered, to the consumer, not later than three days after the date on which the report was first requested, and
includes a statement informing the consumer of his right to request the additional disclosures provided for under subsection (b) of this section and the written summary of the rights of the consumer prepared pursuant to section 168/g(c) of this title; (Emphasis Added.)
The summary of rights prepared under subparagraph (A) shall include a description of-
the right of a consumer to obtain a copy of a consumer report under subsection (a) of this section from each consumer reporting agency;
the frequency and circumstances under which a consumer is entitled to receive a consumer report without charge under section 1681j of this title;
the right of a consumer to dispute information in the file of the consumer under section 1681i of this title;
the right of a consumer to obtain a credit score from a consumer reporting agency, and a description of how to obtain a credit score;
the method by which a consumer can contact, and obtain a consumer report from, a consumer reporting agency without charge, as provided in the regulations of the Bureau prescribed under section 211 (c) of the Fair and Accurate Credit Transactions Act of 2003; and
the method by which a consumer can contact and obtain a consumer report from, a consumer reporting agency described in section 168 l a(w) of this title, as provided in the regulations of the Bureau prescribed under section 168 lj(a)(l )(C) of this title;
DEFENDANTS did not comply with l68lg(c)(B)(1) because the disclosure did not state the right of a consumer to obtain a copy of a consumer report from each consumer reporting agency.
DEFENDANTS did not comply with 1681 g(c)(B)(2) because the disclosure did not state the frequency and circumstances under which a consumer is entitled to receive a consumer report without charge.
DEFENDANTS did not comply with 1681g(c)(B)(3) because the disclosure did not state the right of a consumer to dispute information in the file of the consumer.
DEFENDANTS did not comply with 1681g(c)(B)(4) because the disclosure did not state the right of a consumer to obtain a credit score from a consumer reporting agency and a description of how to obtain a credit score.
DEFENDANTS did not comply with 168lg(c)(B)(5) because the disclosure did not state the method by which a consumer can contact, and obtain a consumer report from, a consumer reporting agency without charge.
DEFENDANTS did not comply with 1681 g(c)(B)(6) because the disclosure did not state the method by which a consumer can contact, and obtain a consumer report from, a consumer reporting agency described in section 1681a(w) of this title as provided in the regulation of the Bureau prescribed under section 1681j(a)(1)(C)of this title.
