Written By ESR News Blog Editor Thomas Ahearn
On December 8, 2020, a California-based company that provides background check reports to property management companies agreed to pay $4.25 million as part of a settlement with the Federal Trade Commission (FTC) over allegations the firm failed to follow reasonable procedures to ensure the accuracy of its reports about potential tenants in violation of the Fair Credit Reporting Act (FCRA), according to a press release from the FTC.
The complaint filed on behalf of the FTC by the U.S. Department of Justice (DOJ) claimed the tenant screening company violated the FCRA by failing to implement reasonable procedures to ensure that criminal and eviction records received from a third party vendor were accurate before including the information in tenant screening reports, and including eviction or non-conviction criminal records more than seven years old in reports.
Under the FCRA, companies that provide tenant screening background reports on consumers are required to follow reasonable procedures to ensure the “maximum possible accuracy” and are prohibited from reporting certain obsolete information. The FTC claimed the tenant screening company failed to implement procedures to adequately review the accuracy of the information before including the information in background reports.
Property managers use the tenant screening company’s reports to screen tenants. In addition to the $4.25 million monetary penalty, the proposed settlement prohibits the tenant screening company from providing non-conviction criminal or eviction records older than seven years and requires the company to maintain reasonable procedures to ensure the maximum possible accuracy of information included in its background check reports.
“Consumers face enough hurdles in obtaining housing without the additional burden of inaccurate background checks,” Andrew Smith, Director of the FTC’s Bureau of Consumer Protection, stated in the press release, also adding that “all background screening agencies must follow reasonable procedures to ensure that the background reports that they provide to their customers are as accurate as possible.”
Enacted by Congress in 1970, the FCRA 15 U.S.C § 1681 promotes the accuracy, fairness, and privacy of consumer information contained in the files of Consumer Reporting Agencies (CRAs), protects consumers from the willful and/or negligent inclusion of inaccurate information in their consumer reports, and regulates the collection, dissemination, and use of consumer information, including consumer credit information.
Employment Screening Resources® (ESR) – a leading global background check provider that was named the number one background screening firm in 2020 by HRO Today – offers FCRA-compliant background screening solutions and white papers on how employers may avoid FCRA lawsuits and how CRAs may avoid FCRA lawsuits. To learn more about background check services from ESR, visit www.esrcheck.com.
NOTE: Employment Screening Resources® (ESR) does not provide or offer legal services or legal advice of any kind or nature. Any information on this website is for educational purposes only.
© 2020 Employment Screening Resources® (ESR) – Making copies of or using any part of the ESR News Blog or ESR website for any purpose other than your own personal use is prohibited unless written authorization is first obtained from ESR.