Written By ESR News Blog Editor Thomas Ahearn
On October 16, 2018, the Federal Trade Commission (FTC) announced that a tenant screening company in Texas agreed to pay $3 million to settle charges of failing to take reasonable steps to ensure the accuracy of information provided to landlords and property managers that caused renters to be falsely associated with criminal records in violation of federal Fair Credit Reporting Act (FCRA), according to an FTC press release.
The FTC complaint claimed that from at least January 2012 until September 2017 the tenant screening company violated the FCRA by using broad criteria to match applicants to criminal records and only applied limited filters to the results, and did not have policies or procedures to assess the accuracy of those results. The settlement is the largest civil penalty the FTC has obtained from a background screening company.
The tenant screening company compiled screening reports through an automated system that used the applicant’s first name, middle name when available, last name, and date of birth when searching for criminal records. The matching criteria only required an exact match of an applicant’s last name along with a non-exact match of a first name, middle name, or date of birth, the FTC complaint claimed.
Because the tenant screening company’s screening reports associated some potential renters with criminal records that did not belong to them, those renters may have been turned down for housing, according to the FTC complaint. In addition to the civil penalty, the proposed settlement requires the tenant screening company to maintain reasonable procedures to assure the maximum possible accuracy of its information.
“You shouldn’t get turned down for an apartment because someone has the wrong information about you,” Andrew Smith, Director of the FTC’s Bureau of Consumer Protection which conducted the investigation, stated in the press release about the settlement. “This case shows that, especially with today’s tight rental market, we will hold tenant screening companies responsible for the accuracy of their reports.”
The tenant screening company issued a statement regarding the settlement with the FTC that expressed disappointment that the FTC singled out their screening report results “for an issue that has confronted the entire screening industry, namely how to match applicants with common last names to public records when most courts do not make social security or driver’s license numbers available as part of those records.”
Passed by Congress in 1970, the FCRA promotes the accuracy, fairness, and privacy of consumer information contained in the files of consumer reporting agencies. It is intended to protect consumers from the willful and/or negligent inclusion of inaccurate information in their credit reports and regulates the collection, dissemination, and use of consumer information, including consumer credit information.
Under FCRA § 607. Compliance procedures [15 U.S.C. § 1681e]: (b) Accuracy of report. Whenever a consumer reporting agency prepares a consumer report it shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates. A complete copy of the FCRA is available at www.ftc.gov/system/files/545a_fair-credit-reporting-act.pdf.
In July 2018, ESR News reported that the FTC – a U.S. government agency promoting consumer protection – testified before the Senate Banking, Housing, and Urban Affairs Committee that “vigorous enforcement of the FCRA continues to be a top priority” for the FTC and that the FTC had played a key role in the implementation, enforcement, and interpretation of the FCRA since its enactment in 1970.
In 2016, ESR News reported that the FTC issued guidance for landlords who use background checks to screen tenants and for tenant background screening companies to help them comply with the FCRA which the FTC helps to enforce. To learn more about this subject, read a short article entitled “Tenant Screening and the FCRA” by Montserrat C. Miller, a background screening attorney at Arnall Golden Gregory LLP in Washington, DC.
ESR Helps Employers Comply with FTC and FCRA Requirements
Since background checks are governed by litigation, regulation, and legislation, Employment Screening Resources® (ESR) – a leading global background check provider – closely partners with clients and takes an active role in ensuring employers comply with legislative and regulatory requirements including the Federal Trade Commission (FTC) and Fair Credit Reporting Act (FCRA). To learn more, visit www.esrcheck.com.
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