Consumer Protection: Why the Fair Credit Reporting Act matters to your company.

• Author: Barnhill, Michael C.
• Position: Legal Brief

Many Utah companies know that it's easy to run afoul of the various state and federal consumer protection laws. Businesses often see consumer protection laws as things that turn minor, innocent mistakes into serious liabilities. Other Utah companies never deal with consumers, so they believe that the various state and federal laws do not apply to them. However, this ignores a large group of consumers that each business deals with--employees and job applicants.

The Federal Credit Reporting Act (FCRA) addresses when employers can pull their employees' (or applicants') credit reports and the purposes for which employers can use those reports. If an employer wants to pull a credit report for an employee or a prospective employee, the employer must give the person notice that the business may use the credit report in its employment decisions. The notice has to be its own document and not part of an employment application. The employer also needs to get the person's permission to pull the credit report, and then it needs to certify to the credit reporting agency that it notified the person and got the person's permission to pull the report, complied with the FCRA's requirements, and that the employer will not discriminate against individuals or misuse the information.

Before the employer rejects a job application, reassigns or terminates an employee, denies a promotion or takes any other adverse employment action based on information in a consumer report, the employer must give the applicant or employee a notice that includes a copy of the consumer report you relied on to make your decision and a copy of A Summary of Your Rights Under the Fair Credit Reporting Act, which is available from the Federal Trade Commission. This requirement is intended to give the person an opportunity to notify the employer if the credit report is inaccurate.

If an employer takes an adverse action based on a credit report, the employer must give the applicant or employee a notice of that fact (orally, in writing or electronically). An adverse action notice tells people about their rights to see information being reported about them and to correct inaccurate information. The notice must include: (1) the name, address and phone number of the consumer reporting company that supplied the report; (2) a statement that the company that supplied the report did not make the decision to take the unfavorable action and can't give specific reasons for it; and (3) a notice of the...