FCRA Disclosure Revisited

By Bill Wright

In these unsettled days of a new administration, it is almost soothing to see the courts focus on statutory language alone. Almost.

The Fair Credit Reporting Act (“FCRA”) requires that, before a prospective employer (or its consumer reporting agency (“CRA”)) obtains a background report on an applicant, the applicant must receive a disclosure of his or her rights under the FCRA. According to the statute, the disclosure has to be in a document that consists “solely” of the disclosure. Oh, but the document that “solely” contains the disclosure can also contain the applicant’s authorization to get the report.

Recently, an employee brought a class action against his employer and its CRA because the FCRA disclosure form had an authorization clause that also purported to “discharge, release and indemnify [the] prospective employer [and the CRA] . . . from any and all liability and claims arising by reason of the use of this release . . .” The Ninth Circuit ruled that the plain language of the FCRA, requiring that the form contain solely the disclosure, was sufficient notice to all prospective employers that adding a waiver in the form would violate the FCRA. In fact, the statute is so very clear that the violation was willful as a matter of law. Consequently, the employer and the CRA are open to the class action. Syed v. MI, LLC and Pre-Check, Inc., No. 14-17186 (9th Cir. Jan. 20, 2017).

Employers may have been complacent about the word “solely” in the FCRA. Previously, the only court opinion on the issue had focused on whether the disclosure was clear and conspicuous and served the purpose of notifying consumers of their rights. Moreover, if you can append the consent to obtain a report to the document that (otherwise) solely contains the disclosure, why not add a sentence that says that the consumer’s consent is a complete defense to claims? Why not? Because the statute says “solely.” Time to review the forms your CRA provides you.