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Fair Credit Reporting: 8.11.2.1 Nature and Form of Authorization and Notice

Prior to using a consumer report in connection with employment, the user/employer must give notice to the consumer that it may use a consumer report for such purposes.558 In addition to the notice, the employer must also obtain written authorization from the employee to access the consumer report.559 Delegating the obligation to provide notice and obtain the consumer’s consent to a third-party agent may not violate the FCRA.560

Fair Credit Reporting: 8.11.3.1 Nature and Content of Notice

Under the FCRA, employers are required to provide notices before taking any adverse employment action whenever that decision is based, even just in part, on a consumer report.605 Employers are required to make this disclosure any time they deny initial employment, promotion, or job transfer to an employee.606 Whether the employer relied on the consumer report, in whole or in part, may be an issue of fact not resolvable at the dismissal or summary judgment stage.

Fair Credit Reporting: 8.11.3.2 Time of Notice

The requirement of prior disclosure for the pre-adverse action notice is unique to employment decisions. A consumer may be able to create an issue of fact as to the sequence of events by showing that the employer actually made or conveyed the decision to take an adverse action before formally notifying the consumer of the action.622

Fair Credit Reporting: 8.11.3.3 Enforcement of Right

The failure of an employer to provide the pre-adverse action notice subjects the employer to the usual private remedies of the FCRA including actual damages, punitive damages, costs, and attorney fees.627 This distinguishes the pre-adverse action notice from other notices given after the adverse action under section 1681m, of which the 2003 FACTA amendments to the FCRA have likely eliminated the ability of consumers to seek private enforcement.628 In circumstances where the plaintiff does not se

Fair Credit Reporting: 8.11.4.1 Content and Nature of Notice

As with any other adverse action based in whole or in part on a consumer report, an employer must provide a notice to the employee or application after taking the adverse action, pursuant to section 1681m(a). The contents and nature of the notice are discussed in § 8.5.2, supra.

Fair Credit Reporting: 8.11.4.2 Enforcement of Right

Revisions to the FCRA by the 2003 FACTA amendments have been interpreted by many courts as removing any private rights of action to enforce the provisions of section 1681m.632 As such, the viability of any claims for violation of these notice requirements is in grave doubt.

Fair Credit Reporting: 8.11.5.1 Content and Nature of Notice

When a consumer reporting agency supplies public record information to a user for employment purposes and that information is likely to have an adverse effect on employment, the CRA must comply with at least one of the following two procedures.633 The first option requires the CRA to provide notice to the consumer that the CRA is supplying the public record information to a user.

Fair Credit Reporting: 8.11.5.2 Time and Manner of Notice

The CRA must follow specific requirements whenever the CRA furnishes “items of information on consumers which are matters of public record and are likely to have an adverse effect upon a consumer’s ability to obtain employment.”640 This section applies not only when the information is likely to have an adverse effect on an individual’s obtaining employment, but also when the information will adversely affect the consumer’s ability to retain employment or obtain promotion.641

Fair Credit Reporting: 8.11.5.3 Enforcement of Right

The failure of a CRA to either maintain strict procedures to ensure the accuracy of public record information or else to provide notice that a report has been provided is subject to the usual private remedies of the FCRA including actual damages, punitive damages, costs, and attorney fees.649

Fair Credit Reporting: 8.12.1.1 Types of Affiliate Sharing

Consumer information that is shared among companies or other entities related by common ownership or affiliated by corporate control may be excluded from the definition of consumer report.650 The FCRA regulates this internal sharing (known as “affiliate” sharing) by requiring users to notify consumers of the intended use and providing them with opportunities to opt out of that sharing.651

Fair Credit Reporting: 8.12.1.2 Relation to the Gramm-Leach-Bliley Act

The FCRA requires only that the consumer be given a one-time notice of the right to opt out of affiliate information sharing. However, the Gramm-Leach-Bliley Act,656 a federal statute concerning the privacy of consumer financial information, requires most financial institutions to provide an annual notice to their customers of their privacy policies and of a consumer’s right to opt out from the sharing of personal information with nonaffiliate third parties.657

Fair Credit Reporting: 8.12.2 Affiliate Sharing Exclusion Notice

The provisions of section 1681a(d)(2)(A)(iii) do not prescribe the manner in which the notice and opt-out right must be communicated and exercised, but they do require that the notice must be clear and conspicuous. However, the opt-out election does not have an expiration date, and thus the consumer’s choice to opt out of affiliate sharing of information appears to be permanent. Contrast this with the right to opt out of affiliate marketing solicitations, which expires and must be renewed every five years.

Fair Credit Reporting: 8.12.3.1 Generally

Section 1681s-3 of the FCRA sets forth the requirements of the notice required for affiliate sharing in relation to marketing material. The notice to the consumer must clearly and conspicuously disclose that the information may be communicated among affiliates and provide the consumer with the right to opt out of such marketing.661

Fair Credit Reporting: 8.12.3.2.1 Introduction

Understanding Regulation V’s affiliate sharing requirements requires understanding how Regulation V defines some prominent terms. Furthermore, while not used in this regulation, it may ease understanding of this somewhat complex set of provisions to think of the entity that originally possessed the consumer’s information as the “donor affiliate,” the entity that will communicate the information to its affiliate. The affiliate that receives the information, and that hopes to use it market to the consumer, may be thought of as the “acquiring affiliate.”

Fair Credit Reporting: 8.12.3.2.3 “Preexisting business relationship”

“Preexisting business relationship” is another important term that Regulation V defines.670 This term turns on the degree of prior contact between the consumer and the entity seeking to use that consumer’s information for marketing purposes (the acquiring affiliate). The term is highly critical, because if a preexisting business relationship exists between the consumer and an acquiring affiliate, the consumer can lose the right to a notice and opportunity to opt out of the use of their information.

Fair Credit Reporting: 8.12.3.2.4 Covered solicitations

Regulation V also defines the meaning of making “a solicitation for marketing purposes,” which would constitute a solicitation covered by the regulation.676 The definition has three elements—a receipt element, a use element, and a provision element:

Fair Credit Reporting: 8.12.3.3.3 Delivery of notice

Regulation V requires delivery of the notice of the right to opt out “so that each consumer can reasonably be expected to receive actual notice.”689 Examples of reasonable delivery include delivering the notice by hand, mailing a copy of the notice to the consumer’s last known mailing address, sending a notice by e-mail (so long as the consumer has agreed to receive electronic disclosures in that manner), and posting the notice on an Internet website at which the consumer obtained a product or service electronically, so long as the consumer i

Fair Credit Reporting: 8.12.3.4 Reasonable Opportunity and Reasonable and Simple Method to Opt Out

As for permitted methods for allowing consumers to opt out, Regulation V envisions a number of forms of communication of the opportunity.694 Regulation V provides for examples of such “a reasonable opportunity” when the notice is mailed, sent by electronic means, provided at the time of an electronic transaction, at the time of an in-person transaction, and through inclusion in a Gramm-Leach-Bliley privacy notice.695 The last option is more complicated.696

Fair Credit Reporting: 8.12.3.6 Exceptions

The general notice requirement of the regulation appears to be fairly broad, but there are a number of expansive exceptions from the requirement to provide the notice and opt-out right to a consumer.718 The most significant exception is a preexisting business relationship, which exempts situations where the acquiring affiliate uses the eligibility information to “make a solicitation for marketing purposes to a consumer with whom [the acquiring affiliate has] a preexisting business relationship.”719