Question 1

What is FCRA adverse action and when does it apply to AI hiring?

Accepted Answer

FCRA adverse action under 15 U.S.C. § 1681m occurs when an employer takes a negative employment action (rejecting a candidate, withdrawing an offer) based in whole or in part on information from a consumer report. In the AI hiring context, adverse action requirements are triggered when the AI tool uses third-party consumer data about the candidate to generate scores or assessments that inform the rejection decision. Tools like Eightfold AI, which use scraped professional profile data, are the primary risk area.

Question 2

What is the Eightfold AI FCRA lawsuit?

Accepted Answer

In January 2026, a class action was filed against Eightfold AI alleging violations of FCRA (15 U.S.C. § 1681) for using data scraped from approximately 1 billion professional profiles to create employment screening assessments without: obtaining candidate consent, providing permissible purpose disclosures under 15 U.S.C. § 1681b, or issuing adverse action notices when candidates were rejected based on Eightfold's scores. Employers who used Eightfold to screen candidates without FCRA compliance face independent liability.

Question 3

What are the two required FCRA adverse action notices?

Accepted Answer

FCRA requires two separate adverse action notices. (1) Pre-adverse action notice: before taking adverse action, the employer must provide the candidate with a copy of the consumer report used and a written description of FCRA rights (the FTC Summary of Consumer Rights). The employer must then wait a reasonable period (typically 5 business days) before finalizing the decision. (2) Post-adverse action notice: after the decision is made, the employer must notify the candidate of the adverse action, provide the consumer reporting agency's contact information, and inform the candidate of their right to dispute the report within 60 days.

Question 4

What is the 5-day rule for FCRA adverse action?

Accepted Answer

FCRA does not specify exactly 5 days, but courts and the FTC have consistently interpreted the pre-adverse action waiting period as requiring at least 5 business days between providing the pre-adverse action notice and finalizing the adverse action. This gives the candidate time to review the consumer report and dispute any inaccuracies before the rejection becomes final. AI screening tools that auto-reject candidates instantly without any waiting period are in systematic violation of this requirement.

Question 5

Does FCRA apply to LinkedIn data and social media sourcing tools?

Accepted Answer

It depends on how the data is used. If an employer uses a third-party tool that scrapes LinkedIn profiles, GitHub activity, or other professional data and uses those data points to generate an employment screening score or assessment, that tool is likely functioning as a consumer reporting agency (CRA) under FCRA (15 U.S.C. § 1681a). Employers who use such scores in hiring decisions must comply with adverse action notice requirements for any candidate who is rejected based on those scores.

Question 6

What class action risk does missing FCRA adverse action notices create?

Accepted Answer

Under 15 U.S.C. § 1681n (willful violations), class action plaintiffs can recover statutory damages of $100–$1,000 per class member — capped at the lesser of $500,000 or 1% of the employer's net worth. Punitive damages are also available for willful violations. For a mid-size employer that rejects thousands of candidates per year using AI screening tools without adverse action notices, class action exposure can quickly reach tens of millions of dollars. The FTC can also impose civil penalties for systematic violations under 16 C.F.R. § 698.

Question 7

How can a candidate dispute a FCRA consumer report used in AI hiring?

Accepted Answer

After receiving a post-adverse action notice, the candidate has 60 days to dispute the accuracy or completeness of the consumer report with the consumer reporting agency that provided it. The CRA must investigate the dispute within 30 days. During an active dispute, the employer cannot rely on the disputed report to finalize adverse action. If the dispute results in a corrected report, the employer must reconsider the candidate's application using the corrected information.

Question 8

What does the FTC's Summary of Consumer Rights look like for AI hiring?

Accepted Answer

The FTC's model Summary of Consumer Rights (16 C.F.R. § 698 Appendix K) is a standardized document explaining a consumer's rights under FCRA including: the right to a free copy of their consumer report, the right to dispute inaccurate information, the right to know if information is used against them in an employment decision, and contact information for the Consumer Financial Protection Bureau (CFPB) and FTC. This exact document must be included with every pre-adverse action notice — modified versions may not satisfy the requirement.

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