Clarity on FCRA Disclosure and Certification Requirements May Be Coming

Employers often struggle with the many disclosure and certification requirements of the Fair Credit Reporting Act (FCRA). A recently introduced bill in the US House of Representatives aims to provide new clarity on these requirements. On November 23, 2021, US Representatives Madeline Dean and Trey Hollingsworth introduced HR 6067, the Clarity in Consumer Disclosures Act of 2021. According to a press release by Representative Dean,

“[t]his legislation will direct the Consumer Financial Protection Bureau (CFPB) to create clear, plain-language model forms for consumer reports so that employers can fulfill the requirements of FCRA.”

Model Documents and Language to Help Employers

If passed, the CFPB must, within one year of enactment of the law, develop and issue:

• Model language for the certifications a user of background reports must provide to their background report provider before obtaining a background report for employment purposes.
• Model disclosure and authorization forms that comply with the FCRA’s background report disclosure and authorization requirements.
• A model consent form and language that can be used in any form for a consumer to provide the required consent if a background report contains certain medical information if that report is to be used for employment purposes or in connection with a credit transaction.
• A model form and language that can be included in any forms that can be used to provide a consumer with the required disclosures and notifications before obtaining an “investigative consumer report,” as the FCRA defines that term.
• Model language for the required certifications a user must provide to their background report provider before obtaining an “investigative consumer report”.
• Model language of certification regarding the permissible purpose for a user to obtain a background report, as required by 15 USC § 1681b(f)(2) and 15 USC § 1681e(a).

Formatting and Components of Model Forms and Model Language

To the extent possible, the CFPB must attempt to create a single, integrated model form that complies with all of the above requirements. Any model forms or language developed by the CFPB must be in plain language understandable by an average reader, cannot contain citations to law, and must be easily adapted based on specific consumer reports.

Additionally, the CFPB must consider state laws when developing the model forms. Among other things, it must:

• Review state laws regulating background reports.
• Develop the model FCRA forms to satisfy any state law requirements substantially similar to FCRA requirements.

The bill includes a safe harbor provision, providing added protections to employers that use background reports for employment purposes. Employers that use a model form developed by the CFPB intended to meet a specific FCRA requirement and that accurately reflects the practices of that employer are considered to be compliant with that requirement.

Verified Credentials will continue to monitor the progress of this bill and release updates as it moves forward.