Appeals Court Rule Overturns Part of FCRA Suit Dealing With Credit Report Disclosure

The Ninth Circuit Court of Appeals has partially upheld and partially reversed a lower court’s decision related to the background check forms filled out by prospective employees and how they must comply with the Fair Credit Reporting Act.

A copy of the ruling in the case of Walker v. Fred Meyer Inc., can be accessed by clicking here.

The plaintiff filed suit against the defendant after being turned down for a job because of the results of his credit report. He alleged that the defendant violated two sections of the FCRA — that the disclosure form he signed as not clear and conspicuous that consisted solely of the disclosure, and that he should have been notified that he could discuss the consumer report directly with his prospective employer. A District Court judge dismissed the lawsuit, determining the defendant had not violated the FCRA, but the Ninth Circuit reversed the ruling on the disclosure form that was signed, ruling it contained extraneous information. The Appeals Court affirmed the dismissal of the other claim, agreeing that the FCRA only requires employers to provide a description of the consumer’s right to dispute with a consumer reporting agency the completeness or accuracy of any item of information contained in the consumer’s file at the consumer reporting agency.

The disclosure that the plaintiff signed when applying for the job read:

We ([t]he Kroger family of companies) will obtain one or more consumer reports or investigative consumer reports (or both) about you for employment purposes. These purposes may include hiring, contract, assignment, promotion, reassignment, and termination. The reports will include information about your character, general reputation, personal characteristics, and mode of living.

We will obtain these reports through a consumer reporting agency. The consumer reporting agency is General Information Services, Inc. GIS’s address is P.O. Box 353, Chapin, SC 29036. GIS’s telephone number is (866) 265-4917. GIS’s website is at

To prepare the reports, GIS may investigate your education, work history, professional licenses and credentials, references, address history, social security number validity, right to work, criminal record, lawsuits, driving record and any other information with public or private information sources.

You may inspect GIS’s files about you (in person, by mail, or by phone) by providing identification to GIS. If you do, GIS will provide you help to understand the files, including communication with trained personnel and an explanation of any codes. Another person may accompany you by providing identification.

If GIS obtains any information by interview, you have the right to obtain a complete and accurate disclosure of the scope and nature of the investigation performed

The plaintiff argued, and the Appeals Court agreed, that the inclusion of the phrase “investigative consumer reports” goes beyond what is supposed to be in the disclosure, as required by the FCRA.

The defendant argued that the statute — which requires applicants be provided with a “disclosure . . . that a consumer report may be obtained for employment purposes,” — does not define “disclosure” or what can be included. So the Ninth Circuit did it for the defendant.

We now hold that beyond a plain statement disclosing “that a consumer report may be obtained for employment purposes,” some concise explanation of what that phrase means may be included as part of the “disclosure” required by § 1681b(b)(2)(A)(i). For example, a company could briefly describe what a “consumer report” entails, how it will be “obtained,” and for which type of “employment purposes” it may be used.

Where the disclosure went off the rails was in the final two paragraphs, the Appeals Court said. While they appear to have been added in good faith, it “pulls the applicant’s attention away from his privacy rights,” and should have been provided in a separate document.

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