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Tenant Screening Under Fcra 11 3 2011


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Overview of how the federal Fair Credit Reporting Act applies to tenant-screening reports. Given at the National Consumer Rights Litigation Conference in Chicago, Ill., on Nov. 3, 2011.

Tenant Screening Under Fcra 11 3 2011

  1. 1. Residential TenantScreening under the FCRAEric Dunn, Staff AttorneyNorthwest Justice Project401 Second Ave. S., Ste. 407Seattle, Washington 98104Tel. (206) 464-1519, ext.
  2. 2. Tenant-Screening Reports 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))
  3. 3. Tenant-Screening Report: Contents 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
  4. 4. 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)
  5. 5. 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
  6. 6. Access to report (or lack thereof) 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
  7. 7. FCRA Consumer Disclosures 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?
  8. 8. 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
  9. 9. 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
  10. 10. Commonly Reported Civil Litigation: Unlawful detainers (“evictions”) Bankruptcies, collection suits Tenant plaintiff (security deposit, repairs, etc.) Protection order petitions (DV, etc.)
  11. 11. “Eviction” Records Washington’s “SCOMIS” search result screen
  12. 12. Categorical Exclusion“It is the policy of 99 percent of our customers inNew York to flat out reject anybody with alandlord-tenant record, no matter what the reasonis and no matter what the outcome is, because iftheir dispute has escalated to going to court, anowner will view them as a pain,” said JakeHarrington, a founder of…” --New York Times, Nov. 26, 2006
  13. 13. 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
  14. 14. 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)
  15. 15. 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
  16. 16. 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
  17. 17. 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
  18. 18. Here’s how our new TenantScore® makes it easy for you to makecritical decisions. First, we take credit, criminal, and evictioninformation; then extract the pertinent and analyzable parts intoalgorithmic formulas which tell you if your applicant is a PASS orFAIL based upon this vital criteria:
  19. 19. Sample report from
  20. 20. The trouble with interviews…
  21. 21. 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