$3M FCRA settlement puts tenant background screening at the forefront

When people want to rent a house or apartment, the most important “screening” isn’t on the windows of their future new place. It’s the tenant background screening that happens behind the scenes, and the results can make the difference between a sweet home and homelessness.

The FTC announced a record $3 million settlement with Texas-based RealPage, Inc., a consumer reporting agency (CRA) that provides tenant background check services. According to the complaint, the company violated the Fair Credit Reporting Act’s requirement that the CRA follow reasonable procedures to ensure the greatest possible accuracy. The FTC alleged that the company failed to comply with key provisions of the FCRA, which caused significant problems for consumers who were unfortunate enough to have similar names or birth dates to people with criminal records.

RealPage provides background reports on potential tenants to landlords and property management companies across the country. Among other things, these reports typically include the applicant’s rental or eviction history, credit information from the three major credit rating agencies, and information about their criminal record.

Of course, many people have similar names, dates of birth, etc. That’s one reason FCRA Section 607(b) requires that “whenever a consumer reporting agency prepares a consumer report, it shall follow reasonable procedures to ensure that the report is as accurate as possible.” Information about the individual(s) covered by the report. The FTC alleges that RealPage’s automated systems were used to “match” housing applicants with criminal record data stored in RealPage’s database or public records, resulting in inaccurate information being reported to landlords, including false statements that potential tenants had criminal records.

When determining whether a potential tenant is a “match” for someone with a criminal record, RealPage’s criteria require an exact match only to the applicant’s last name. During the timeframe alleged in the complaint, RealPage used “soft” (or imprecise) matching for first names, middle names, and dates of birth. You’ll need to read the complaint for details, but here are just some examples:

• RealPage will report a criminal record match if the first three letters of the name match or there is a phonetic match. For example, Anthony Jones born on 10/15/67 would be paired with Antony Jones, Antonio Jones, or Antoinette Jones born on the same day.
• If the date of birth and last name match, RealPage will report criminal records with matching initials. For example, Anthony Jones, born on 10/15/67, would match A. Jones, born on the same day.
• If the first and last name match exactly and the middle name matches or is empty, RealPage will report a criminal record match when the birth dates are one year apart. For example, Anthony Jones born on 10/15/67 will be paired with Anthony Jones born on 10/15/68.

According to the FTC, during the timeframe described in the complaint, RealPage did not have adequate procedures in place to narrow down the results produced by its broad match criteria, even for consumers with common names. The company applied only limited filters to these broad results and did not check them for accuracy. For people trying to rent a house or apartment, the result is that RealPage provides the landlord or property manager with incorrect information, indicating that the applicant has a criminal record or, in some cases, is on the sex offender registry.

The $3 million civil penalty is the largest ever in an FTC case against a background check company. The settlement also requires RealPage to comply with FCRA provisions that require the company to “engage in reasonable procedures to ensure the greatest possible accuracy.”

Please visit the BCP Business Center for resources on complying with the Fair Credit Reporting Act, including the text of the amended law.

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