Property management company RealPage has agreed to pay $3 million to settle Federal Trade Commission charges the company failed to take reasonable steps to ensure the accuracy of tenant screening information provided to landlords and property managers, a violation of federal law that caused some potential renters to be falsely associated with criminal records, according to a release.

“In numerous instances, RealPage failed to follow reasonable procedures to assure maximum possible accuracy of the criminal record information in its tenant screening reports. Since at least Jan. 1, 2012, through Sept. 19, 2017 … RealPage failed to follow reasonable procedures to assure that the criminal record information contained in its tenant screening reports concerned the actual applicant for housing,” according to the FTC release.

RealPage said in a statement the FTC questioned the accuracy of a minuscule fraction of the company’s screening report results. The company is a provider of software and data analytics to the apartment industry and real estate industry and compiles screening reports through an automated system

The FTC’s complaint alleges that RealPage, Inc. violated the Fair Credit Reporting Act (FCRA) by failing to take reasonable steps to ensure the accuracy of tenant screening information provided to its clients.

The amount RealPage has agreed to pay as part of the settlement is the largest civil penalty the FTC has obtained against a background screening company.

Tenant screening reports associated potential renters with criminal records that did not belong to them

“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, said in the release. “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 FTC alleges that from at least January 2012 until September 2017, RealPage used broad criteria to match applicants to criminal records and only applied limited filters to the results, and did not have policies or procedures in place to assess the accuracy of those results.

RealPage 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.

Its 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 alleges. For example, if RealPage searched an applicant named Anthony Jones born on Oct. 15, 1967, it would deem a match if it found a criminal record for Antony Jones 10/15/67, Antonio Jones 10/15/67 and Antoinette Jones 10/15/67, according to the FTC.

RealPage disagrees with FTC assertions

In a statement the company said, “During its investigation, the FTC questioned the accuracy of a minuscule fraction of RealPage’s screening report results. The FTC’s investigation centered on certain ‘soft’ matching practices for consumers with common last names. The FTC was unable to identify any prior industry or regulatory guidance or other clear legal precedent that RealPage should have followed. No judicial findings of fact were made and, as set forth in the Stipulated Order, RealPage makes no admission of wrongdoing. All of the practices identified by the FTC predated RealPage’s release of innovative new matching logic in September 2017.

“We were disappointed that the FTC singled out RealPage 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. We believe our newest matching technology provides market-leading accuracy in spite of these challenges. While we disagree with the FTC’s assertions, we agreed to settle this matter in order to avoid the expense and distraction of litigation,” the company said in a release.

Tenant screening reports to landlords and property managers had records of individuals other than the applicant

“RealPage would provide reports containing records of several different individuals with different names and, in some instances of sex offender registry information, would provide reports containing photographs of several different individuals with different names,” the complaint says.

“RealPage provided consumer reports to clients, including landlords and property managers, that included criminal records of individuals other than the applicant, including:

1. individuals with a different name from the applicant (including names that are not common nicknames or slight misspellings of the applicant’s name);
2. individuals with a different date of birth from the applicant;
3. multiple individuals with different names, dates of birth, and differences in other identifiers such as gender or race;
4. multiple individuals with different photographs.

Renters may have been turned down for housing after tenant screening

Because RealPage’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 or other opportunities, according to the complaint.

In addition to the civil penalty, the proposed settlement also requires RealPage to maintain reasonable procedures to assure the maximum possible accuracy of the information it includes about individuals in its consumer reports. In addition, RealPage is subject to compliance and reporting requirements.

The Commission vote authorizing the staff to file the complaint and stipulated final order was 5-0. The FTC filed the complaint and final order in the U.S. District Court for the Northern District of Texas, Dallas Division. NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest. Stipulated final orders have the force of law when approved and signed by the District Court judge.

RealPage has been expanding and this month announced that it has entered into an agreement to acquire Rentlytics, which will expand the company’s business intelligence and performance analytics platform by nearly 900,000 additional multifamily units. Rentlytics provides owners and operators with normalized data across multiple third-party systems, resolving system incompatibility, data accuracy issues and time-to-analysis delays.

Resources:

Texas Company Will Pay $3 million to Settle FTC Charges That it Failed to Meet Accuracy Requirements for its Tenant Screening Reports

RealPage FTC Settlement Statement

FTC vs. RealPage Stipulated Order For Permanent Injunction And Civil Penalty

FTC vs. RealPage Complaint

Fair Credit Reporting Act

Richardson’s RealPage to pay $3 million fine for falsely linking apartment applicants to crimes