• TOP TIP: Make Sure Electronic FCRA Forms Are Compliant
  • December 19, 2016
  • Law Firm: Shawe Rosenthal LLP - Baltimore Office
  • We have previously discussed the need to ensure that the required Fair Credit Reporting Act disclosure and authorization forms and notices meet the very technical requirements of the Act, and wanted to highlight a recent case that discusses this need in the electronic context. For more, click here.

    The FCRA applies where an employer uses a third-party consumer reporting agency to conduct background checks (including criminal and credit checks) on its applicants and/or employees. The FCRA requires, among other things, that before conducting any background check, the employer provide to applicants a “clear and conspicuous disclosure” in writing that informs them that a consumer report (i.e. background check) may be obtained for employment purposes. The FCRA also requires that the employer obtain written authorization from the applicant to conduct the background check. The disclosure must be in a stand-alone “single document” that consists solely of the disclosure, or the disclosure and the authorization only.

    In Burnthorne-Martinez v. Sephora USA, Inc., the company’s electronic application form included an authorization to obtain credit and background reports. This authorization appeared on a single web-page, and contained not only the FCRA-required disclosure and authorization, but also another paragraph, entitled “Certification and Release” that required the applicant to certify that, among other things, the information provided on the application was true and complete, the applicant gives permission to past employers to release information about the applicant, and the applicant waives all claims with regard to the providing of such information.

    The company argued that the term “single document” was ambiguous in the web-based application context. The court, however, analogized the web-page to the “single document,” finding that the web-page in question contained more information than was permitted under FCRA.

    The lesson here is that employers who use an electronic application form and who include a FCRA disclosure and authorization form as part of the online process must ensure that the FCRA disclosure and authorization appears on a web page separate from any other information, and requests an electronic signature separate from any other signature that is obtained in any other part of the application process.