oes not dictate the manner by which a company may use criminal conviction information, a number of state and local laws require companies to balance the worker’s rights with the interests of customer safety and the protection of property including sensitive financial and health information. While compliance can be even more challenging in those jurisdictions covered by multiple criminal background laws, there are nonetheless a number of effective ways to navigate these laws and minimize legal exposure, especially for companies that deploy independent contractors on a nationwide basis and those that use the services of independent contractors remotely. Congress included in this permissible purpose the requirement that employers provide to prospective employees a clear and conspicuous disclosure form in a document consisting solely of the disclosure that a consumer credit report is beong procured and obtain a written authorization from the individual. FCRA Sec. 604(b)(2)(A)(i) and (ii), 15 U.S.C. § 1681b(b)(2)(A)(i) and (ii). Further, if a company is provided with criminal conviction information on a credit reporting agency report on which it intends to base an adverse employment decision such as rejecting the applicant, the employer must first give a pre-adverse action notice to the applicant providing the applicant with a copy of the report, a summary of rights, and a reasonable period of time to dispute the accuracy of the information or explain its findings. FCRA Sec. 604(b)(3)(A), 15 U.S.C. § 1681b(b)(3)(A). The summary of rights has been updated from the summary last published in October 2018 and the updated version must be used by March 20, 2024. The Spanish-language version can be found here.Monfort v. CKGG Health Services, No. 1:19-cv-00354-MLB, 2020 WL 9599752 (N.D. Ga. Sept. 12, 2020). That decision was not appealed and the case thereafter settled following mediation. One circuit court nearly 50 years ago addressed a closely related issue in connection with a lawsuit against a credit r

nd debt collection landscape and could have a detrimental effect on medical and dental providers’ bottom line.As we previously noted, the CFPB, under director Rohit Chopra, continues to make medical financing and debt collection a priority of the agency’s agenda. In prepared remarks on a call with Vice President Kamala Harris, Director Chopra noted that 58% of all third-party debt collection tradelines were for medical debt, making medical debt the most common debt collection tradeline on credit records in 2021. The problem, per the CFPB, is that billing and insurance adjustment errors can cause inaccurate reporting, and medical billing data is less predictive of future repayment when compared to traditional credit obligations.Currently, the Fair Credit Reporting Act limits the inclusion of medical information on credit reports and only permits a creditor to use medical information in a manner and to an extent no less favorable than it would use comparable non-medical information. See 15 U.S.C. § 1681b(g)(1)(C) (noting in relevant part that creditors may supply “information … relating to debts arising from the receipt of medical services… where such information… do not provide information sufficient to infer, the specific provider or the nature of such services”). See also 12 C.F.R. § 1022.30(d)(1)(ii) (“Regulation V”) (providing that creditor may “use[] the medical information in a manner and to an extent that is no less favorable than it would use comparable information that is not medical information in a credit transaction”).The CFPB under Director Chopra looks to go further suggesting that medical debt collectors are “weaponizing the credit reporting system.” In its recent outline, the CFPB is considering proposing to: (1) revise Regulation V, such that creditors are prohibited from obtaining or using medical debt collection information to make determinations about a consumer’s credit eligibility; and (2) prohibit consumer reporting agencies from including medical debt collection tradel

t 1, the homeowner filed a petition for a writ of certioraria to the U.S. Supreme Court, requesting that the Court hear the case to resolve a circuit split.Background:In Wolf v. Carpenter, Hazlewood, Delgado & Bolen, LLP, the HOA hired the defendant law firm to collect allegedly delinquent assessments from the plaintiff homeowner. Before filing suit, the defendant obtained the plaintiff’s consumer report. Subsequently, the plaintiff filed a class action alleging that the defendant did not have a permissible purpose under the FCRA to obtain her consumer report because HOA assessments are not “credit transactions.” The FCRA permits companies to obtain a consumer’s report in only six enumerated circumstances, including when the person obtaining the report “intends to use the information in connection with a credit transaction involving the consumer on whom the information is to be furnished and involving the extension of credit to, or review or collection of an account of, the consumer.” 15 U.S.C. § 1681b(f)(1). This permissible purpose is one of the most widely used bases by businesses to access consumer reports.The district court granted the defendant’s motion for summary judgment finding the defendant had a permissible purpose under the FCRA because HOA assessments are credit transactions because they involve deferred payments. “The undisputed facts show that the HOA annual assessment was structured to provide for deferred payments. The HOA assessment is set on a yearly basis, and homeowners pay that assessment in installments throughout the year.” The court analogized the scenario to the one presented in Brothers v. First Leasing, 724 F.2d 789 (9th Cir. 1984), where the Ninth Circuit found that a consumer lease was a credit transaction.The plaintiff appealed and the Ninth Circuit affirmed the district court’s decision. Notably, however, the court of appeals did not hold that HOA assessments were “credit transactions,” but that the defendant was entitled to rely on Brothers to conclude th

he English and Spanish versions of the Summary and are available on the CFPB’s website. Employers and consumer reporting agencies (CRAs) must provide the Summary to applicants and employees to comply with the federal Fair Credit Reporting Act (FCRA).1 Employers, for example, must include the Summary with every pre-adverse action notice.The CFPB’s changes to the Summary include non-substantive revisions to correct contact information for various federal agencies. The CFPB also revised the Summary to update references to obsolete business types, such as “Federal Land Banks,” and to make other technical corrections.Employers and CRAs should ensure they update their forms by the March 20, 2024 deadline. But employers and CRAs may want to defer implementing the updated Summary to see if the CFPB corrects at least one remaining typo. Otherwise, it might be necessary to make the same change twice if the CFPB releases a further revised version.Footnotes​1See, e.g.,15 U.S.C. §§ 1681g(c)(2)(A), 1681b(b)(2), 1681b(b)(3).

must be included in adverse action notices under the Equal Credit Opportunity Act (ECOA). Specifically, the CFPB is correcting the contact information in the Summary of Consumer Rights model form for multiple federal agencies (including the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC)), updating references to obsolete business types, and making other technical corrections. For ECOA, the Bureau is amending appendix A, which contains federal agency contact information that creditors must include in ECOA adverse action notices, and correcting its own contact information in appendix D.As background, the Summary of Consumer Rights explains certain consumer rights available under the FCRA. Consumer reporting agencies (CRAs) must provide the Summary of Consumer Rights: (a) with each written disclosure from the CRA to a consumer (15 U.S.C. § 1681g(c)(2)(A)); and (b) with, or prior to providing, a consumer report for employment purposes (15 U.S.C. § 1681b(b)(1)(B)). A user must provide the Summary of Consumer Rights: (a) with the required disclosure prior to procuring an investigative consumer report (15 U.S.C. § 1681d(a)(1)); and (b) with pre-adverse action notices for employment purposes (15 U.S.C. § 1681b(b)(3)).The updated model form is available on the CFPB website in English and Spanish.As for ECOA, § 1002.9(b)(1) provides model language that satisfies certain disclosure requirements of 12 CFR 1002.9(a)(2) relating to adverse action notices. These notices must include federal agency contact information located in appendix A to Regulation B. The Bureau is revising appendix A to update agency contact information, including the OCC, FDIC, and the Federal Trade Commission. Additionally, appendix D to § 1002 sets forth the process by which entities may request official Bureau interpretations of Regulation B. The CFPB is amending paragraph 2 in appendix D to correct the zip code for the Bureau and to replace the reference to the Division of Res

Lawsuits against employers under the FCRA show no signs of abating in 2023, including nationwide class actions.Employers can fortify efforts to comply with the FCRA by, among other things, reviewing their policies and procedures and providing FCRA compliance training.The continued filing of lawsuits against employers under the FCRA underscores the need for in-house counsel, Human Resources, and Talent Acquisition to comply with the statute, especially the “pre-adverse action” notice requirement in 15 U.S.C. § 1681b(b)(3)(A).1Employers have had some recent success knocking FCRA claims for “informational injuries” out of federal court by contesting the plaintiff’s “standing” under Article III of the U.S. Constitution.2 These victories hinge on the federal constitutional requirements for a plaintiff to pursue any claims in federal court (e.g., injury-in-fact), not on the merits.3 Courts remain split on the rules for standing to bring pre-adverse action notice claims, however, and it is a mistake to assume the standing cases allow employers to let their guard down.4 They do not.Even apart from the circuit court split on standing rules, the FCRA allows claims in federal or state court (i.e., there is concurrent jurisdiction), and state courts may not be bound by Article III even when adjudicating claims under a federal statute.5Pre-Adverse Action NoticeAs a reminder, if an employer intends to take any “adverse action” against a candidate based on information in a background report (e.g., criminal convictions)

[1] Both CRAs and consumer report users should take notice.[2]By way of background, FCRA Section 604(a) (15 U.S.C § 1681b(a)) establishes the circumstances under which a CRA may provide a consumer report to a user.Specifically, the CRA must have reason to believe the user has one of several enumerated permissible purposes for obtaining the report.Likewise, FCRA Section 604(f) (15 U.S.C. § 1681b(f))) prohibits a person from using or obtaining a consumer report “unless . . . the consumer report is obtained for a purpose for which the consumer report is authorized to be furnished ….”The significant development is that the CFPB cautioned that the FCRA’s permissible purpose requirements are consumer-specific.In other words, a permissible purpose exists “only with respect to the consumer who is the subject to the user’s request.”

The FCRA provides that before an employer takes an adverse action against a consumer based on a consumer report, the employer must provide a copy of the report to the consumer. 15 U.S.C. § 1681b(b)(3)(A). The Court concluded that SC Data violated the FCRA when it did not provide a copy of the report to Schumacher before rescinding her job offer.

In Hebert v. Barnes & Noble, Inc., the plaintiff filed a putative class action against retailer Barnes & Noble, contending it willfully violated the FCRA by providing job applicants with a disclosure that included extraneous language unrelated to the topic of consumer reports. The plaintiff alleged that this extraneous language violated the FCRA’s requirement that an employer provide a standalone disclosure informing the applicant that an employer may obtain the applicant’s consumer report when making a hiring decision pursuant to 15 U.S.C. §§1681a(h) and 1681b(b)(1)(A).Following discovery, Barnes & Noble filed a motion for summary judgment arguing that no reasonable jury could find that its purported FCRA violation was willful, as the erroneous disclosure form was the result of a mistake in drafting that occurred when Barnes & Noble revised a sample disclosure provided by a consumer reporting agency to ensure compliance with the FCRA.

s similar to the FCRA’s definition of consumer report), what constitutes an “adverse action” in respect of such insurance scores (which is similar to the FCRA’s definition of adverse action), and when an adverse action notice must be sent in respect of such adverse actions (which trigger language is similar to the FCRA’s trigger language). This analysis will depend on the state-specific implementation of the NCOIL Model (where applicable), or on other related state laws and regulations addressing this subject matter (for those states that have not adopted some form of the NCOIL Model).Of course, in analyzing these issues, insurers should consult extensively with insurance and federal regulatory counsel as to the specific nature of the administrative decisions, how Models are created and used, and what the impact of such administrative decisions and Models are on applicants and consumers.1 15 U.S.C.A. § 1681a(k)(1)(B)(i).2 15 U.S.C.A. § 1681m(a).3 15 U.S.C.A. § 1681a(d)(1)(A) and (C).4 15 U.S.C.A. § 1681b(a)(3)(C).515 U.S.C.A. § 1681m(a).