FCRA Disclosure May Include “Concise” Explanation of Consumer Report

The U.S. Court of Appeals for the Ninth Circuit found that required disclosure to applicants and employees before obtaining a consumer report under the Fair Credit Reporting Act could include a brief explanation of what is a consumer report and how it would be used. It also found that the FCRA does not require employers to provide an opportunity to discuss the consumer reports directly with the employer.

The Fair Credit Reporting Act requires employers, before using a third party consumer reporting agency to obtain an applicant’s or employee’s consumer report (i.e. background check), to provide a disclosure document consisting “solely of the disclosure” that such a report may be obtained. In Walker v. Fred Meyer, Inc., the plaintiff claimed that the company violated the FCRA by including additional information. The Ninth Circuit held “that beyond a plain statement disclosing ‘that a consumer report may be obtained for employment purposes,’ some concise explanation of what that phrase means may be included as part of the “disclosure” required by [the law]. For example, a company could briefly describe what a ‘consumer report’ entails, how it will be ‘obtained,’ and for which type of ‘employment purposes’ it may be used.”

The Ninth Circuit also held “that the right provided by the FCRA to dispute inaccurate information in a consumer report does not require employers to provide job applicants or employees with an opportunity to discuss their consumer reports directly with the employer.” Rather, those individuals have the right to dispute the consumer report only with the third party consumer reporting agency.

Although only binding in the Ninth Circuit, this decision provides some useful guidance to employers regarding the appropriate parameters of what information may properly be included in the requisite disclosure document, as well as what recourse is legally required to be available to applicants and employees regarding inaccuracies in the consumer report.