Just say NO… to rental history database searches!
The Federal Trade Commission recently warned the operators of six websites that
share information about consumers’ rental histories with landlords that they may be subject to the requirements of the Fair Credit Reporting Act (FCRA). The letter clearly states that “…If <these firms> assemble or evaluate information on individuals’ rental histories and provide this information to landlords so that they can screen tenants, <they> are a consumer reporting agency (“CRA”) that is required to comply with the FCRA.”
Bottom line… if it looks like a duck, walks like a duck and quacks like a duck, it’s a duck – frantic quacks and wing flapping aside!! It is quite likely then, that these folks will be found to be Consumer Reporting Agencies and that rental history database searches used for tenant screening purposes are Consumer Reports as defined by the Fair Credit Reporting Act. What then are the implications?
As CRA’s, these firms must (among other things):
- “…follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates;
- Give consumers a copy of their information upon request;
- Allow consumers to dispute information they believe is reported in error; and
- Advise End-users (landlords) of their obligation to notify consumers (applicants) if Adverse Action is taken based in whole or in part on the results of the search.
But there is more! Landlords subscribing to these services are generally “Furnishers” as well as “End-users” under the law. So they must comply with section §623 (as well as §615) of the FCRA. While landlords may be familiar with End-user obligations, few are familiar with requirements
set forth in section §623 – “Responsibilities of furnishers of information to consumer reporting agencies”. Here are just a few:
- Provide accurate Information;
- Correct and update information <as needed>;
- Provide notice of disputes associated with information submitted <to the CRA>;
- “…have in place reasonable procedures to respond to any notification that a consumer is the victim of identity theft;
- Promptly reinvestigate disputes concerning the accuracy of information furnished and report the results of that investigation to the CRA; and
- You get the idea….
Banks and credit card companies are intimately familiar with requirements imposed on data Furnishers and have the knowledge, tools and resources needed to fully comply. The process is automated which reduces the odds of human error. Information is submitted and updated automatically. Data furnished is purely objective – e.g. credit limits, outstanding balances, payment history, etc. Few landlords or property managers are similarly equipped – which raises concerns about the completeness and accuracy of data returned.
So to recap…
- Firms offering tenant history database searches to End-users for tenant screening purposes are Consumer Reporting Agencies.
- Rental history database searches are Consumer Reports.
- CRA’s and their products (Consumer Reports) are regulated by state and federal consumer reporting law – which impose specific requirements on CRA’s, End-user’s AND Furnisher’s of the rental history data.
- Participating landlords are typically “Furnishers” AND End-users of rental history database data – and, therefore, subject to requirements set forth in section §623 as well as section §615 of the FCRA.
- The quality of rental history database data is uncertain – given the way the data is collected – the lack of the knowledge, tools and resources necessary to ensure the completeness, accuracy and objectivity of the data submitted.
Finally, and perhaps most important – without the protections afforded by the FCRA, rental history database products may result in blacklisting of individuals (Consumers) without their knowledge – which most would agree is patently unfair.
So… here is Tenant & Employee screening Best Practice #3: Just Say No – to rental history database searches!
Do rental verifications instead. They are old-school but very effective. Do them yourself or outsource them to your tenant screening company. Just do them! You will get better data without the risk inherent in either Furnishing or using “rental history database” information.
This post is part of a series devoted to tenant & employee screening “best practices”. See Best Practices 1 & 2. Visit Moco Incorporated or MyScreeningReport.com for more information about comprehensive tenant screening products – including