9th Circuit Finds Violation Of Fair Credit Reporting Act

By Kamer Zucker Abbott

February 4, 2019

The Ninth Circuit Court of Appeals recently ruled that an employer violated the disclosure requirements of the Fair Credit Reporting Act (“FCRA”) in the case of Gilberg v. California Check Cashing Stores, LLC. The court found that the disclosure used by the employer violated the FCRA because it contained extraneous information relating to state laws and was not written in clear language.

An employer that uses third party vendors to gather applicant information as part of its background check process is required to notify the applicant of his rights under the FCRA via a “clear and conspicuous disclosure” in a document that consists solely of the disclosure – i.e., a “stand-alone disclosure.” The employer in the Gilberg case used a FCRA disclosure that also addressed applicants’ rights under the laws of specific states. The court determined that this extraneous information violated the FCRA’s stand-alone requirement. The court also found that the employer’s disclosure used language a reasonable person would not understand and was confusing because it combined a discussion of state and federal law. As such, the disclosure was not clear. The employer did satisfy the “conspicuous” requirement, however, by capitalizing, bolding and underlining the headings for each section of its disclosure and labeling the form so an applicant could see what she was signing. The court recommended that the employer use a larger, clearer font in the future.

This case illustrates the importance of these forms. Both the content and the appearance of FCRA disclosures can be scrutinized by attorneys and ultimately, the courts. Employers can use the recently-updated model forms available via the Consumer Financial Protection Bureau to ensure that their disclosures satisfy the requirements of the FCRA. For more information about these requirements, please contact a KZA attorney.