The Ninth Circuit clarifies what is needed to have an Article Three standing in court. To have Article Three standing, a plaintiff alleges that there has been an injury to himself in terms of “an invasion of legally protected interests,” which is concrete and not hypothetical. 

Under 604 of the Fair Credit Reporting Act (FCRA), a consumer report or a credit check may be obtained on a consumer for employment purposes. An employer can get into trouble and face a class-action lawsuit, if a formal standalone disclosure document, required under the FCRA, is not provided and authorized by the employee or the consumer when checking the credit of an employee obtaining a consumer report. If the document is not provided and authorized, the employer opens himself up for litigation.

The employer is liable to provide the consumer with clear and conspicuous disclosures, which refers to the clarity of the document. Article Three, related to FCRA, can have a standing in court when a plaintiff alleges that the report was not provided or that it was not standalone nor clear. 

What does the 604 FCRA document require?

 This draws attention to the two most important things that have to be kept in mind when providing an employee with a disclosure document; firstly, it has to be clear, with no extra wordings. Secondly, it needs to be separate and standalone. These are pretty much the only requirements under the Fair Credit Reporting Act. 

For example, in the case of Ruiz vs. Shamrock Foods Company 2020, the plaintiffs alleged that there was a violation of the Act as there was extraneous information in the disclosure that they received. However, they did not provide any substantial evidence which proved that the plaintiffs found the document confusing, or that they would not have signed it if the report was according to the FCRA standards. Hence, the Ninth Circuit did not find Article Three standing in this case. Although the disclosure was provided and was standalone, the document had a lot of extra information besides the standard clauses. 

Another Ninth Circuit decision was during the Saeed vs. MI LLC, 2017 case, where the Ninth Circuit did not find Article Three standing. The disclosure document was standalone but had extraneous information in it, and if Saeed had fought more robustly, he might have won the case. However, the evidence produced showed that the plaintiff would not have signed the document and consented to the credit pool if it was according to the FCRA standards and only contained the required information. This was based on the fact that the plaintiff had alleged that he had been deprived of their ability to authorize a meaningful credit check. Due to the wordings of this allegation, the Ninth Circuit decided not to find Article Three standing. 

For Article Three to hold, the plaintiff has to prove that there have been violations to the FCRA standards. Although they did provide the evidence in Saeed’s case, the phrasing of the evidence led the court to infer that he would not have signed the authorization for the credit check if the document was what it originally had to be. 

Hence, that is the difference. If there is extra information in the document or the language is confusing, it changes the meaning of the disclosure, taking the context out of the paper, which leads to the consumer going unprotected. Additional language in the document dilutes the original content, and that’s where the case began when Saeed filed the lawsuit. He alleged that the extra information made the document sound different, and that’s why he signed it, but if it were like the original document, he would not have signed it. 

The judge agreed with the above argument. Although the plaintiffs in the Ruiz case had alleged that they were deprived, and were trying to piggyback on the Saeed case, they did not offer substantial evidence regarding their deprivation or found the document confusing. Therefore, the Ninth Circuit declared Article Three not standing, as there was no evidence to show any depravity. 

What should an employer do?

Examples of these two cases show that an employer has to most importantly make sure to provide employees or potential employees clear and standalone disclosures during the interview process, according to the FCRA regulations. There should not be any modifications of the wordings, nor should anything be removed. It has to be treated like the Bible. Because adding additional information, or removing the existing words, takes away the root purpose of a formal document. And legally, it opens the employer up for litigation by violating the laws of FCRA. 

Additionally, before starting credit checks for employment purposes, it is essential to have the firm’s attorney, an FCRA attorney, and a business attorney present to ensure the document is within the law. If a clause has to be tweaked, which is not recommended, but attorneys are more than essential to be present if it has to be attorneys. In case, if there is neither an FCRA attorney nor a business attorney available, reach out directly to ADP or Paychecks, or similar companies who process your payroll, and they will provide the correct guidance. It may not be legal advice, but they will point towards the right direction, in order how to go about the procedure. Some employers do not provide the disclosures to their employees before running a credit check or try to violate the FCRA regulations by having modified disclosures, which is inappropriate and can only lead to litigation. Hence, to ensure an employer’s legal safety, an employer has to provide a clear and standalone document to the employee before a credit check. 

 The disclosures must be standalone and conspicuous. If the document is not separate nor explicit, then there’s a possible violation. So, the disclosures should be provided before credit checks and should be clear and distinct. And most importantly, have an attorney present to make sure no laws are being violated.