tenant screening under fcra 11 3 2011
DESCRIPTION
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.TRANSCRIPT
![Page 1: Tenant Screening Under Fcra 11 3 2011](https://reader036.vdocuments.net/reader036/viewer/2022062303/55614e16d8b42adb6b8b502b/html5/thumbnails/1.jpg)
Residential Tenant Screening under the FCRAEric Dunn, Staff AttorneyNorthwest Justice Project401 Second Ave. S., Ste. 407Seattle, Washington 98104Tel. (206) 464-1519, ext. [email protected]
![Page 2: Tenant Screening Under Fcra 11 3 2011](https://reader036.vdocuments.net/reader036/viewer/2022062303/55614e16d8b42adb6b8b502b/html5/thumbnails/2.jpg)
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
![Page 3: Tenant Screening Under Fcra 11 3 2011](https://reader036.vdocuments.net/reader036/viewer/2022062303/55614e16d8b42adb6b8b502b/html5/thumbnails/3.jpg)
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
![Page 4: Tenant Screening Under Fcra 11 3 2011](https://reader036.vdocuments.net/reader036/viewer/2022062303/55614e16d8b42adb6b8b502b/html5/thumbnails/4.jpg)
![Page 5: Tenant Screening Under Fcra 11 3 2011](https://reader036.vdocuments.net/reader036/viewer/2022062303/55614e16d8b42adb6b8b502b/html5/thumbnails/5.jpg)
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)
![Page 6: Tenant Screening Under Fcra 11 3 2011](https://reader036.vdocuments.net/reader036/viewer/2022062303/55614e16d8b42adb6b8b502b/html5/thumbnails/6.jpg)
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
![Page 7: Tenant Screening Under Fcra 11 3 2011](https://reader036.vdocuments.net/reader036/viewer/2022062303/55614e16d8b42adb6b8b502b/html5/thumbnails/7.jpg)
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)
![Page 8: Tenant Screening Under Fcra 11 3 2011](https://reader036.vdocuments.net/reader036/viewer/2022062303/55614e16d8b42adb6b8b502b/html5/thumbnails/8.jpg)
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
![Page 9: Tenant Screening Under Fcra 11 3 2011](https://reader036.vdocuments.net/reader036/viewer/2022062303/55614e16d8b42adb6b8b502b/html5/thumbnails/9.jpg)
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
![Page 10: Tenant Screening Under Fcra 11 3 2011](https://reader036.vdocuments.net/reader036/viewer/2022062303/55614e16d8b42adb6b8b502b/html5/thumbnails/10.jpg)
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
![Page 11: Tenant Screening Under Fcra 11 3 2011](https://reader036.vdocuments.net/reader036/viewer/2022062303/55614e16d8b42adb6b8b502b/html5/thumbnails/11.jpg)
Commonly Reported Civil Litigation:
Unlawful detainers (“evictions”) Bankruptcies, collection suits Tenant plaintiff (security deposit, repairs, etc.) Protection order petitions (DV, etc.)
![Page 12: Tenant Screening Under Fcra 11 3 2011](https://reader036.vdocuments.net/reader036/viewer/2022062303/55614e16d8b42adb6b8b502b/html5/thumbnails/12.jpg)
“Eviction” Records
Washington’s “SCOMIS” search result screen
![Page 13: Tenant Screening Under Fcra 11 3 2011](https://reader036.vdocuments.net/reader036/viewer/2022062303/55614e16d8b42adb6b8b502b/html5/thumbnails/13.jpg)
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
![Page 14: Tenant Screening Under Fcra 11 3 2011](https://reader036.vdocuments.net/reader036/viewer/2022062303/55614e16d8b42adb6b8b502b/html5/thumbnails/14.jpg)
![Page 15: Tenant Screening Under Fcra 11 3 2011](https://reader036.vdocuments.net/reader036/viewer/2022062303/55614e16d8b42adb6b8b502b/html5/thumbnails/15.jpg)
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
![Page 16: Tenant Screening Under Fcra 11 3 2011](https://reader036.vdocuments.net/reader036/viewer/2022062303/55614e16d8b42adb6b8b502b/html5/thumbnails/16.jpg)
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)
![Page 17: Tenant Screening Under Fcra 11 3 2011](https://reader036.vdocuments.net/reader036/viewer/2022062303/55614e16d8b42adb6b8b502b/html5/thumbnails/17.jpg)
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
![Page 18: Tenant Screening Under Fcra 11 3 2011](https://reader036.vdocuments.net/reader036/viewer/2022062303/55614e16d8b42adb6b8b502b/html5/thumbnails/18.jpg)
![Page 19: Tenant Screening Under Fcra 11 3 2011](https://reader036.vdocuments.net/reader036/viewer/2022062303/55614e16d8b42adb6b8b502b/html5/thumbnails/19.jpg)
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
![Page 20: Tenant Screening Under Fcra 11 3 2011](https://reader036.vdocuments.net/reader036/viewer/2022062303/55614e16d8b42adb6b8b502b/html5/thumbnails/20.jpg)
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
![Page 21: Tenant Screening Under Fcra 11 3 2011](https://reader036.vdocuments.net/reader036/viewer/2022062303/55614e16d8b42adb6b8b502b/html5/thumbnails/21.jpg)
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:
![Page 22: Tenant Screening Under Fcra 11 3 2011](https://reader036.vdocuments.net/reader036/viewer/2022062303/55614e16d8b42adb6b8b502b/html5/thumbnails/22.jpg)
![Page 24: Tenant Screening Under Fcra 11 3 2011](https://reader036.vdocuments.net/reader036/viewer/2022062303/55614e16d8b42adb6b8b502b/html5/thumbnails/24.jpg)
The trouble with interviews…
![Page 25: Tenant Screening Under Fcra 11 3 2011](https://reader036.vdocuments.net/reader036/viewer/2022062303/55614e16d8b42adb6b8b502b/html5/thumbnails/25.jpg)
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