CFPB: Third-party reports on workers subject to FCRA

The CFPB has issued Consumer Financial Protection Circular 2024-06, "Background Dossiers and Algorithmic Scores for Hiring, Promotion, and Other Employment Decisions," presenting the question: "Can an employer make employment decisions utilizing background dossiers, algorithmic scores, and other third-party consumer reports about workers without adhering to the Fair Credit Reporting Act (FCRA)?"

The guidance warns that companies using third-party consumer reports — including background dossiers and surveillance-based, “black box” AI or algorithmic scores about their workers — must follow FCRA rules. This means employers must obtain worker consent, provide transparency about data used in adverse decisions, and allow workers to dispute inaccurate information.