Need to Know!

Tenant Screening & Limits on Use of the Death Master File (DMF)

October 28, 2014 4:19 pm

The Bipartisan Budget Act (Act) of 2013 imposed strict limits on access to (and use of) data from the “Death Master File” (DMF).  The DMF is “…information on the name, social security account number, date of birth, and date of death of deceased individuals maintained by the Commissioner of Social Security….”. DMF data is accessed and reported by the national credit bureaus, and is used extensively as a fraud prevention tool.

The limit on access to the DMF was added to the Act at the urging of the administration to combat a growing form of tax fraud – use of the personal information of deceased individuals to generate phony tax returns and refund requests.  Section 203 of the Act prohibits the Commerce Department from granting access to the DMF within three calendar years of an individual’s death unless the recipient is first “certified” under Section 203 (b) of the Act. 

Certification requires that those with access to the DMF warrant that their access is appropriate based on a “legitimate fraud prevention interest” or “… a business purpose pursuant to a law, governmental rule, regulation, or fiduciary duty….”

The Act requires that those with access to the DMF have the “…systems, facilities, and procedures in place to safeguard such information, and experience in maintaining the confidentiality, security, and appropriate use of such information….” and limits sharing of DMF data to End-users (e.g. landlords) who meet the above certification requirements.

Note that there are significant penalties for violation of this provision of the Act and virtually no precedent to guide us with regard to compliance.

Tenant Screening Implications

DMF data is essential to the authentication process – which of course is critical to the tenant screening function.  Unless or until we confirm the identity of an applicant – any credit, public records or other data developed isn’t worth the paper (or light emitting diodes) it is written on.  It is hard to imagine, then, a more legitimate fraud prevention interest and business
purpose
for accessing DMF data.

Landlords credentialed in accordance credit bureau requirements and who comply with the terms of the tenant screening agreement are likely to have the “…systems, facilities, and procedures in place to safeguard such information,
and experience in maintaining the confidentiality, security, and appropriate use
of such information….”

In an effort to protect themselves and their End-users (e.g. landlords) – one of the bureaus now requires that End-users take steps to establish the validity of data derived from the DMF (and included in the consumer’s credit profile) – before taking adverse action based on that data (found in the credit report).

Few would argue with the need to address the tax fraud issue.  Taking additional steps to validate DMF data – to verify the applicant’s social security number and establish that they are who they say they are – leaves little doubt as to our “fraud prevention interest and business purpose“.

The question becomes, what steps are required and who takes them?

Conclusion

Tax fraud based on the identities of deceased persons is costly and despicable.  The Bipartisan Budget Act (Act) of 2013 applies strict limits on access and use of DMF data – in an effort to combat it.  DMF data is included in consumer credit reports.  Credit bureaus access the DMF, include DMF data in their reports and must comply with the Act.

End-users (including landlords) are well advised to ensure steps are taken to validate DMF flags or other indicia as they appear prior to taking adverse action – to both validate the data and establish a clear fraud prevention interest and business purpose in compliance with the law.

You have a choice.  Do the work yourself or outsource it to your screening company.  We recommend the latter.  Screening companies have the knowledge, tools and controls necessary to do so both efficiently and effectively.

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