VICTIG Compliance Tips – Disclosure and Authorization

Our last article discussed Permissible Purpose. This one addresses your Disclosure and Authorization.

Now don’t yawn and stop reading just yet. 100% of you reading this have certified to us that you will provide disclosure and obtain authorization before ordering information from us. That’s not the issue and the reason many companies have paid millions in damages. And we’re not talking about Joe’s bar and grill, we mean massive companies with more attorneys on staff than many companies have staff.

The most common failing is that these companies have too much information on their disclosure. The Fair Credit Reporting Act says:

(2) Disclosure to Consumer.

(A) In general. Except as provided in subparagraph (B), 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 –

(i) 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; and

(ii) the consumer has authorized in writing (which authorization may be made on the document referred to in clause (i)) the procurement of the report by that person.

The dangerous words in the above are “…in a document that consists solely of the disclosure…”. At some point, on the first day of law school, in Introduction to Law 101, there must have been the
commandment to “obtain a release of liability on any document you have anyone sign.” And if you do that on your Disclosure and Authorization, court after court has ruled that you are breaking the law. And because you probably used that faulty Disclosure and Authorization form repeatedly, it may well evolve into a class action suit.

But it’s not just the release of liability language. You may be tempted to help the applicant on the disclosure. “We want to inform you that while we are obtaining this information on you, we will
evaluate the information and the existence of something negative will certainly not automatically disqualify you from employment. We are a company that likes to provide second-chance opportunities and will discuss anything negative with you before making any decisions.” That’s great and you may sure tell or provide the applicant this information—but have a serious talk with your counsel before you put that on the Disclosure and Authorization.

You may think you have a “clear and conspicuous” Disclosure and Authorization that would pass any inspection—it’s right there at the bottom of your employment application. Uh oh. There’s that “…in a document that consists solely of the disclosure…” stipulation. Being part of the employment application is not solely the disclosure.

The takeaway here is to review your Disclosure and Application and look at it through a lens of “Clear, conspicuous and consisting solely of the disclosure.” Remember, we are not doing this series as a way of pointing out arcane, unusual, clever, or for that matter, dumb ways companies end up in legal jeopardy.

These are the most common problem areas that we see time after time after time. There are law firms that search employer websites looking for online application processes and documents that run afoul of the Fair Credit Reporting Act and they send in applicants who don’t really want a job to apply. That is not hearsay, that is first-hand knowledge.

We are not writing this series to scare you. But we understand you are juggling a lot of balls and want to point out some areas that you should review. We cannot act as your counsel and “approve” or “disapprove” your Disclosure and Authorization forms—but we do provide templates, both hard copy and online that you might compare to yours if you have chosen not to adopt our templates.

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