In May of 2018, President Donald Trump signed into law the Economic Growth, Regulatory Relief, and Consumer Protection Act (Act), which amended the Fair Credit Reporting Act (FCRA). The Act was passed in an effort to ease some of the harsher regulations that were enacted after the financial crisis of 2008-2009. On September 12, 2018, the Consumer Financial Protection Bureau (CFPB) issued an interim final rule to aid businesses in making the adjustment to the new requirements and forms required by the Act.
Effect on Pre-Employment Screenings
The Act now requires employers who run credit checks as part of their pre-employment screening process to provide new disclosure forms to their potential employees. Not providing the correct disclosure forms can leave an employer open to lawsuits. Disclosure forms have always been required as part of the FCRA; however, the Act has granted consumers new rights, and those rights must be reflected in the disclosure forms.
Specifically, the new disclosure forms reflect the following changes:
- Security Freezes. The new forms make it clear that you have the right to freeze your credit and that consumer reporting agencies (i.e., TransUnion, Experian, etc.) are now required to provide security freezes free of charge. Credit security freezes make it much more difficult for lenders to access credit reports, which in turn makes it more difficult for identity thieves to open accounts in someone else’s name.
- Fraud Alerts. The Act amends the current law regarding fraud alerts. Previously, when a fraud alert was issued on a credit report, it was only active for 90 days. That time period has been extended to one year.
- Veterans’ Medical Bills. The newly enacted legislation precludes consumer reporting agencies from including in their report certain medical bills incurred by veterans. This is to protect our veterans from being punished for medical bills they incur as a result of their duty. If you are a veteran, be sure to read the specifics of the new Act, as there are other protections that may apply to you.
The Act includes further changes to things like residential mortgage credit, community bank relief, and student loan protections. It is recommended you read the new Act in its entirety if you think any of these changes may affect you or your business. The changes listed above are only those that are reflected in the new disclosure forms.
With security breaches happening all too often these days, you can never be too careful with your credit. Even if you’re not getting a new job, these rights still apply to you. If you’re not planning on buying a car or a house or taking out any new credit anytime soon, freezing your credit may be a good idea. It makes it much more difficult for anyone to issue credit in your name, thereby preventing identity thieves from obtaining credit cards or other accounts in your name.
It is imperative that any and all businesses that run credit checks on any employees – current or potential – ensure they are using the correct, up-to-date disclosure forms. The new model disclosure forms have been issued by the CFPB in both English and Spanish. The deadline to begin using these new forms was September 21, 2018, and, while you are permitted to amend the forms you currently use, it’s a better idea to get them straight from the source to ensure they are compliant with the new law.