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FCRA Disclosure Form Cannot Contain State Disclosures

By Edgar M. Rivera, Esq.

On January 29, 2019, in Gilberg v. California Check Cashing Stores, LLC, the Ninth Circuit held that a prospective employer violates the Fair Credit Reporting Act (FCRA)—an act passed in 1970 that regulates the collection of credit information and the access to credit reports to ensure fairness, accuracy and privacy of the personal information contained in files of credit reporting agencies—by including information on a disclosure form unrelated to rights protected by the FCRA. 

Desiree Gilberg applied for a job with California Check Cashing Stores, LLC (“CCC”).  As part of her application, Ms. Gilberg signed a separate form entitled “Disclosure Regarding Background Investigation.” This form contained not only a disclosure as required by the FCRA (stating that the prospective employer could obtain a consumer report on her) but also additional disclosure requirements for seven other states.  That is, the disclosure did not just include a summary of Ms. Gilberg’s rights under the FCRA, but also the rights of applicants who reside in several states based on additional, state-specific statutes.  Ms. Gilberg worked for CCC for five months before voluntarily resigning and then bring a suit alleging that CCC failed to make a proper FCRA disclosure.

The FCRA prohibits an employer from obtaining an applicant’s consumer report without first providing the applicant with a standalone, clear and conspicuous disclosure of its intention to do so:

[A] person may not procure a consumer report, or cause a consumer report to be procured, for employment purposes with respect to any consumer, unless— a clear and conspicuous disclosure has been made in writing to the consumer at any time before the report is procured or caused to be procured, in a document that consists solely of the disclosure, that a consumer report may be obtained for employment purposes.

15 U.S.C. § 1681b(b)(2)(A)(i) (emphasis added).

The disclosure must be (1) clear and conspicuous and (2) in a standalone document.

CCC moved for summary judgment.  The district court entered summary judgment against Ms. Gilberg, concluding that CCC’s disclosure form complied with FCRA.  On appeal, Ms. Gilberg argued that the Disclosure Form violated the FCRA because (1) CCC furnished it with other documents and (2) it contained information concerning other state’s mandated disclosure information. 

The Ninth Circuit rejected the Ms. Gilberg’s argument assertion that the relevant document included every form she filled out in the employment process—a total of four pages.  While she argued that under California contract law, “[s]everal contracts relating to the same matters, between the same parties, and made as parts of substantially one transaction, are to be taken together,” the court declined to extend this principle to the FCRA’s definition of a document. Under her proposed interpretation, the court wrote, “it is difficult to see how an employer could ever provide an applicant written application materials without violating FCRA’s standalone document requirement.”  Nonetheless, the form violated the FCRA’s clear and conspicuous and standalone document requirements.  Regarding the “clear and conspicuous” requirement, the form not only contained language a reasonable person would not understand, but the language would confuse a reasonable reader because it combined federal and state disclosures.  Thus, the district court erred in holding that the disclosure form was clear.

Regarding the “standalone document” requirement, relying on the Ninth’s Circuit 2017 decision in Syed v. M-I, LLC, which held that “a prospective employer violates Section 1681b (b)(2)(A) when it procures a job applicant’s consumer report after including a liability waiver in the same document as the statutorily mandated disclosure,” the Court concluded that the FCRA required the disclosure to be in a document that “consist[s] ‘solely’ of the disclosure.”  CCC argued that Syed was not applicable because the extraneous information in Syed involved a liability waiver while the disclosure at issue here consisted of other, state-mandated disclosure information, which furthered, rather than undermined, the FCRA’s purpose.  The court was not persuaded, explaining that Syed’s holding was not limited to liability waivers; rather, Syed considered the standalone requirement with regard to any extraneous information.  Moreover, Syed grounded its analysis of the liability waiver in its statutory analysis of the word “solely,” noting that the FCRA should not be read to have implied exceptions, especially when the exception—in that case, a liability waiver—was contrary to the FCRA’s purpose.  Thus, because the employer’s disclosure form did not consist solely of the FCRA disclosure, it did not satisfy the FCRA’s standalone document requirement.

If you believe your FCRA rights have been violated, please contact The Harman Firm, LLP.

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