Regulations from Federal Agencies and the FCRA

If you use background reports for employment purposes, you are probably well-versed in the federal Fair Credit Reporting Act (FCRA).

But did you know that the FCRA grants the Consumer Financial Protection Bureau (CFPB), a federal agency, rulemaking authority to help implement the FCRA? It’s written right into the law.

FCRA Section 623(e) states that “The Bureau may prescribe regulations as may be necessary or appropriate to administer and carry out the purposes and objectives of this title [the FCRA]…”

What are Regulations?

That’s a big question.  Some lawyers spend their entire careers interpreting regulations and studying the rulemaking authority of administrative agencies of the government.

The Congressional Research Service has a quick overview of federal regulations and their making.  Basically, “Congress often grants rulemaking authority to federal agencies to implement statutory programs.  The regulations issued pursuant to this authority carry the force and effect of law and can have substantial implications for policy implementation.”    Regulations made by federal agencies can often fill in gaps created by legislation. They may also provide technical details about how legislation should be implemented.

The FCRA is no exception. Let’s look at the regulations surrounding the FCRA.

Regulation V – FCRA Regulations

The CFPB maintains “Regulation V” (12 CFR Part 1022) to support the FCRA. Regulation V generally applies to anyone that uses consumer reports for employment purposes, among others. The CFPB provides an interactive, easy-to-navigate electronic format of the regulation that is available here. Regulation V covers important FCRA-related topics, such as:

• Identity theft
• Duties of furnishers of information
• Duties of users of background reports
• Duties of consumer reporting agencies
• File disclosures to consumers
• Affiliate marketing
• Use of medical information

Multiple sections may apply to background report users.  If you use or obtain background reports, you may want to keep reading.

Take “Notice” of Appendix N

The CFPB provides multiple model forms in Regulation V. Under Appendix N, you will find a model “Notice to Users of Consumer Reports.” This notice gives a broad overview of the obligations a user of background reports may have under the FCRA. Essentially everything on your radar for your FCRA obligations is covered at a high-level right there, from adverse action to permissible purpose. This includes sections that cover:

• Permissible purposes
• User certifications to consumer reporting agencies
• Consumer notices of adverse action
• Obligations when disposing of records
• Obligations when using background reports for employment purposes
• And more!

It may be a good idea to read through this notice to understand your obligations. If you already have, it’s never a bad idea to brush up on it. Bookmark it for reference as you navigate the FCRA and when you use background checks. Catch up on other areas in Regulation V while you’re at it!

The FCRA regulations are intended to be helpful to you to determine your legal obligations. If you want more details on the FCRA or Regulation V, you should talk with your trusted legal counsel.