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Did Your Employer Misuse Your Credit Report?

A federal consumer protection statute, the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. §§1681, et seq., protects employees against employer misuse of an employee’s credit report.  Do not be fooled by FCRA’s title – the statute reaches far beyond the realm of credit reporting and governs, among other things, how credit reports are used in the employment context.

How do you know if there has been a misuse of your credit report?  To answer this, ask yourself the following questions:

First, has your employer or potential employer sought to obtain and use your credit report, which broadly includes any information from a consumer reporting agency bearing on your credit, character, reputation, personal characteristics, or mode of living, for any “employment purpose”?  The term “employment purpose” when used in connection with a credit report means a report used for the purpose of evaluating a consumer for employment, promotion, reassignment or retention as an employee.  15 U.S.C. §1681a(h).

If the answer to the first question is yes, then ask yourself whether your employer disclosed its intention to obtain your credit report and obtained your authorization to do so prior to obtaining the report.  The FCRA provides that ordinarily an employer may not request or obtain a credit report until “the consumer has authorized in writing … the procurement of the report.”  15 U.S.C. §1681b(b)2)(A)(ii).  As to disclosure, the FCRA generally requires that, prior to procuring a credit report, the employer make a clear and conspicuous disclosure that a credit report may be obtained for employment purposes, and that the disclosure be set forth “in a document that consists solely of the disclosure.”  15 U.S.C. §1681b(b)(2)(A)(i). If your employer or potential employer failed to follow these requirements, you may be entitled to recover any actual damages, a statutory damage award of up to $1,000, punitive damages, and recovery of attorneys’ fees and costs.  15 U.S.C. §1681n (civil liability for willful noncompliance); 15 U.S.C. §1681o (civil liability for negligent noncompliance).

Moreover, an employer cannot take an “adverse action” (e.g., decline employment, terminate employment, etc.) based on a credit report without first providing the above disclosures to the prospective or current employee.  If the employer fails to provide this information or fails to give you a reasonable amount of time to review the disclosures, it could be in violation of the FCRA, again, entitling you to damages.

If you feel there has been a willful or negligent misuse of your credit report by an employer or prospective employer or if you have any questions or concerns about the same, contact the attorneys at Zeldes Haeggquist & Eck, LLP.

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