Tenant Background Screening Checks Under Federal Scrutiny

Two agencies have asked for comment on tenant background screening issues, especially use of criminal and eviction records and algorithms.

The Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) have asked for comment on tenant background screening checks especially use of criminal and eviction records and algorithms, according to a release.

The FTC and CFPB are working closely to identify practices that may unfairly prevent consumers from obtaining and retaining housing

The FTC and CFPB are asking current tenants, prospective tenants, advocacy groups, commercial and individual landlords, property managers, background screening companies, other consumer reporting agencies, and others to weigh in on a wide array of issues that affect tenant screening such as:

  • How criminal and eviction records are used by landlords and property managers in making housing decisions.
  • How potential inaccuracies in criminal and other records affect rental housing decisions.
  • Whether consumers are informed about the criteria used in tenant screening or notified about what information in their background check led to their rejection.
  • How landlords and property managers are setting application and screening fees.
  • How algorithms, automated decision-making, artificial intelligence, or similar technology are used in the tenant screening process.
  • Whether there are ways to improve the current tenant screening process.

“No one should be shut out of housing because of inaccurate or unfair background screening practices,” Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, said in the release. “We are proud to be part of a whole-of-government effort to ensure fairness and equity in the rental market, and we are looking forward to hearing from the public on this vital issue.”

“Error-ridden background checks are increasingly used by corporate landlords to deny housing to Americans,” Rohit Chopra, Director of the CFPB, said in the release. “We will continue to work together to protect the integrity of our credit reporting system from sloppy background check companies.”

The public will have 90 days to submit comments at Regulations.gov. Once submitted, comments will be posted to Regulations.gov.

Late last year 17 Democratic members of the U.S. House of Representatives sent a letter to the Department of Justice and the Federal Trade Commission asking the agencies to investigate RealPage’s rent-setting software, according to ProPublica.

RealPage has said the data fed into its pricing tool is anonymized and aggregated. It said the company “uses aggregated market data from a variety of sources in a legally compliant manner.”

ProPublica is reporting that RealPage, a Texas-based real estate tech company, is facing a new barrage of questions about whether its software is helping landlords coordinate rental pricing in violation of antitrust laws.

In an Oct. 15 story, ProPublica detailed how RealPage’s pricing algorithm uses competitor data to suggest new prices daily for available apartments. ProPublica raised concerns that the software, sold by RealPage, is potentially pushing rent prices above competitive levels, facilitating price fixing or both.

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