Residential Tenant Screening under the FCRAEric Dunn, Staff AttorneyNorthwest Justice Project401 Second Ave. S., Ste. 407Seattle, Washington 98104Tel. (206) 464-1519, ext. 234EricD@nwjustice.org

Consumer report designed to assist a residential housing provider in deciding whether to lease real property to an applicant

Consumer report (15 USC 1681a(d)) May be investigative report (15 USC 1681a(e)) May contain re-sold reports (15 USC 1681e(e))

Tenant-Screening Reports

Reports almost always contain: Financial credit report (usually from “Big 3”) Criminal background check(s) Civil litigation/eviction records

Often also contain Interviews with past landlords, references Recommendation/score/analysis

Tenant-Screening Report: Contents

Tenant Screening Companies Tenant-screening companies are “consumer reporting

agencies” subject to FCRA 15 USC 1681a(f) Must “follow reasonable procedures to assure maximum

possible accuracy of the information concerning the individual about whom the report relates” (15 USC 1681e(b) (applies when preparing reports)

Approx. 650 tenant-screening companies operating in USA (per NY Times, 11/26/2006)

Common Problems Consumers lack advance access to reports

Limits value of FCRA dispute & reinvestigation Timeline not practical in rental housing context

Unfair exclusions Use of non-predictive information Categorical exclusions/rigid rental criteria

Abuse of public records systems

Few tenant-screening companies will prepare an original report on consumer’s request

Tenant-screening reports ordinarily prepared & transmitted to housing providers only Landlord orders report at time of

application Screening company prepares & transmits report

(usually within hours or minutes) Consumer can now access report Meanwhile, housing provider makes rental decision

Access to report (or lack thereof)

Required disclosures: (15 USC 1681g(a)) All information in the consumer’s file at the time of

the request (note: certain exceptions apply) Sources, Inquiries, credit score (15 USC 1681g(f))

But FCRA does not impose duty to create report at consumer’s request Do the unique characteristics of the rental housing

context make failure to do so an unfair practice?

FCRA Consumer Disclosures

FCRA Dispute & Reinvestigation Steps (15 USC 1681i):

Consumer obtains report, lodges dispute CRA has 30 days to reinvestigate, report results Successful dispute corrects that screener’s report

Meantime, nothing prevents the housing provider from leasing to another applicant Value of correction is minimal if error is likely to

be replicated by other screening companies

Major Information Sources Other consumer reporting agencies

“Credit” reports (Experian, Equifax, TransUnion) Criminal background checks (ChoicePoint, et al.) Correction in original corrects screening report

Public records systems Law enforcement databases

Criminal records, sex offender registries Court/judicial information systems Consumer must correct/remove public record

Commonly Reported Civil Litigation:

Unlawful detainers (“evictions”) Bankruptcies, collection suits Tenant plaintiff (security deposit, repairs, etc.) Protection order petitions (DV, etc.)

“Eviction” Records

Washington’s “SCOMIS” search result screen

Categorical Exclusion“It is the policy of 99 percent of our customers in New York to flat out reject anybody with a landlord-tenant record, no matter what the reason is and no matter what the outcome is, because if their dispute has escalated to going to court, an owner will view them as a pain,” said Jake Harrington, a founder of On-Site.com…”

--New York Times, Nov. 26, 2006

Public Records Systems: Concerns

Generally created for some purpose other than serving as a de facto consumer report

Seldom subject to FCRA-type completeness, accuracy, timeliness requirements

Often lack procedures for correcting or removing harmful information

Reporting Public Records CRA usually follows reasonable procedures (to

assure maximum possible accuracy) if it consults the correct public record and accurately reports contents But a report that omits context, favorable details may

not be of maximum possible accuracy “Technical accuracy” insufficient if overall effect of

report is misleading, casts consumer in false light CRA may have a higher duty on reinvestigation

than in preparation of initial report Dennis v. BEH-1, 520 F.3d 1066 (9th Cir. 2008)

Use of Public Records Systems Access to public records systems may require

users to acknowledge disclaimers, limit use Inconsistent CRA conduct may demonstrate that

procedures are not reasonable CRAs often download public records and

store the information in private databases Must update, refresh information periodically May have contractual obligations with source

Sealing/Correcting Public Records

Due process may provide consumers a right to seal or correct records in public databases

Stigma-Plus Test: deprivation of liberty or property occurs where: Government creates a “stigma” and imposes tangible

burden on person’s ability to obtain a right or status recognized by state law; Paul v. Davis, 424 U.S. 693 (1976)

Deprivation triggers right to notice & hearing

Scores/Analysis CRA gives recommendation or give score

Approve, deny, or “approve with conditions” Basis/raw data may or may not be disclosed Basis for score/recommendation not always clear Criminal, eviction records treated more rigidly

In practice, landlords generally defer to CRA Scoring/recommendation models may drive

housing provider’s rental admissions criteria

Here’s how our new TenantScore® makes it easy for you to make critical decisions. First, we take credit, criminal, and eviction information; then extract the pertinent and analyzable parts into algorithmic formulas which tell you if your applicant is a PASS or FAIL based upon this vital criteria:

Sample report from On-Site.com

    

The trouble with interviews…

Key Areas for Advocacy Improve advance access to reports

Enable consumers to dispute inaccurate or incomplete items before applying for housing NYC’s Tenant Fair Chance Act (2010)

Curb reporting that conflicts with public policy UDs where tenant prevails, protection orders, etc. Discourage/restrict use of categorical exclusions

Greater controls on public records Consumers should be able to correct, update