United States of America: Issued CFPB guidance on protecting workers from unchecked digital tracking and opaque decision-making systems (Circular 2024-06)

On 23 October 2024, the Consumer Financial Protection Bureau (CFPB) issued guidance to protect workers from unchecked digital tracking and opaque decision systems through the Consumer Financial Protection Circular (2024-06). The guidance clarifies that employers are required to comply with the Fair Credit Reporting Act (FCRA) when using third-party consumer reports, algorithmic scores, or background documents for employment decisions including hiring, promotion, reassignment, or retention. Employers must obtain employees' permission to access these reports, provide notice before and after taking actions adverse to the employee based on these reports, and use consumer reports only for permissible purposes as defined by the FCRA. The guidance notes that third-party providers that compile or evaluate information for consumer reports are subject to FCRA regulations. As such, they must ensure accuracy, allow workers to dispute inaccuracies, and disclose report usage to workers upon request. The FCRA provides workers the right to access and dispute information in their file, restricts the reporting of outdated information, and enforces transparency from consumer reporting agencies.