How The FCRA Summary of Rights Effects CRAs
Share this article:
Key Takeaways
- A new version of the FCRA Summary of Rights has been published. Employers and CRAs must start using this new version by March 20, 2024.
- The essential rights of consumers and obligations of employers and CRAs are unchanged. The document changes involve corrected agency contact information, formatting of the document, and some language changes.
- Many experts recommend that employers and CRAs start using the new forms immediately. However, it may be prudent to wait in case the CFPB makes further changes before the mandatory start date.
What is the Updated FCRA Summary of Consumer Rights?
The Consumer Financial Protection Bureau (CFPB) published a new version of its publication, “A Summary of Your Rights Under the Fair Credit Reporting Act,” on March 17, 2023. It supersedes the previous version from October 2018. Employers and CRAs must start using the new version by March 20, 2024.
The Summary of Rights is a plain-language guide to consumer rights under the FCRA. There are several situations in which an employer or a CRA is required to provide an individual with a copy of this document. These include times when a decision not to hire or not to extend credit has been made, or is about to be made, based on findings from a background check. The document explains to the consumer what actions they have a right to take, which include reviewing the background report and challenging the findings. It tells them whom to contact if they think the employer or CRA is not acting properly as required by the FCRA.
There are not substantial changes to the Summary of Rights document. The consumer’s rights and the CRA’s obligations remain as they were before. What has changed is some detailed wording in the Summary. For example, the new Summary updates contact information for several federal agencies. It eliminates references to business types that no longer exist, such as “Federal Land Banks.” There are formatting changes and other technical changes.
These updates were applied to both English and Spanish versions.
Ways the FCRA Update Affects CRAs
CRAs and the clients they support will continue to use the Summary of Rights, but by March of 2024 they must use a new version. A job or credit applicant must be presented with a Summary of Rights any time an adverse action is taken or about to be taken. Decision-makers are required to give the individual a copy of the report along with the Summary. A CRA’s obligation to comply with all federal, state and local fair credit requirements does not change.
Though the 2023 changes are minor, it’s a legal requirement that, by the deadline, CRAs, employers and financial institutions use the updated version. Opinion is divided on how soon CRAs should switch to the new Summary. Some concerned parties say the CRAs should make the transition now, or as soon as possible, to get ahead of the curve and to give individuals the most up-to-date contact information for all agencies involved. Others advice waiting because of the possibility that the CFBP might make further changes before March 20, 2024.
In any case, CRAs will have to ensure that all of their affected employees know about the changeover. They will need to quarantine both paper and electronic copies of the old documents so that they do not get distributed after the deadline.
If the old Summary of Rights was given to an affected individual before the switchover, there is no requirement that a CRA provide them with a copy of the updated version.
Ways the FCRA Update Affects the Consumer
The updated Summary of Rights should make it slightly easier for the consumer to seek redress if they think they have been unfairly treated by an employer, financial institution or CRA. With up-to-date contact information, they should be able to more readily contact the agency that can take action on their behalf.
The consumer’s basic rights have not changed. FCRA continues to govern the ways in which employers and banks use background information. It keeps consumers, including job applicants, from being evaluated based on misinformation or on information that is illegal to use.
The Summary of Rights is available any time a consumer wants to read it, but there are specific instances in which an employer, bank or CRA must call their attention to it by providing them with a copy. The new rules ensure that the provided copy is exactly the same as the current official copy maintained at the CFPB website.
This comes into play when a party that ordered a background check is contemplating adverse action such as refusing to loan or declining to hire, i.e., any situation where the background report may be used against the consumer. Consumers can now be confident that they possess the most up-to-date version of the summary.
FCRA Requirements for CRAs
The Fair Credit Reporting Acts restricts what CRAs may do with the information they retrieve in a background check. They must share it with the consumer if it’s requested, and they may not share it with any third party unless there’s a permissible purpose. The most significant permissible purposes are background checks for a loan and for possible employment.
Employment background check rules require that employers be transparent about when they do background checks and how they use the information. The candidate must be informed that a background check will take place and give written permission. If anything is discovered that would result in a decision not to hire, the candidate must be so informed.
They must be given access to the report and also a copy of the appropriate versions of the Summary of Rights. They must be given the opportunity to rebut the negative findings. Some states have stricter rules by which a background check cannot be ordered until after the employer has extended a conditional job offer.
While CRAs aren’t directly responsible for how background data is used, they have an obligation to ensure it is accurate. Furthermore, CRAs must always investigate claims that there is inaccurate information. If the information is in fact faulty, they must correct the data with the right information.
The Bottom Line
The CFPB has published a new version of the FCRA Summary of Rights, and CRAs must transition to this version by March 20, 2024. The changes to the document are minor, and there will be little or no effect on how employers, banks and CRAs conduct background checks. To keep abreast of and ensure compliance with this and all other new federal, state and local regulations, CRAs can rely on the wholesale services of
Eagle Eye Screening Solutions.
Connect with Us:
