The Fair Credit Reporting Act protects the private reports of consumers, while requiring landlords who deny a rental application based on information contained in the report to provide an 'adverse action report.' Private reports usually include information obtained from credit bureau reports from agencies such as Equifax, Trans Union and Experian. These credit bureaus include the prospective tenant's credit history, past rentals, and reference checking information. The report might also include personal information provided by the prospective tenant such as employment references.
The FCRA requirements apply depending on who is checking on the prospective tenant. If an employee of the landlord is checking the tenant's information, the FCRA requirements do not apply. However, if the landlord has a private agency doing the checking, the FCRA requirements do apply.
Adverse Action Reports
The landlord must file an 'adverse action report' if she denies the rental application based on information included in the private agency's report. The landlord must also file a report if she requires a co-signor on the lease, requires a larger deposit, or raises the rent to a higher amount than for other applicants.
The 'adverse action report' must include the private agency's name and contact information, so that the prospective tenant may correct any dissimilarity in the report. The prospective tenant also has the right to request a free report within sixty (60) days. The private agency must also state that it was not responsible for taking the adverse action and is not able to give specific reasons for the landlord's action.
The notice is required even if the report information was not directly responsible for the adverse action. If a shred of information included in the report led to more investigation into the prospective tenant, and eventually led to denial of the applicant, a notice is required.
Non-compliance Penalties and Legal Action
Non-compliance Penalties and Legal Action
Serious actions may be taken against landlords who fail to comply with FCRA requirements. If an 'adverse action report' is not filed, a prospective tenant may sue the landlord in federal court. Awards may include court costs, attorney fees and punitive damages for deliberate and willful violations. As for isolated cases of landlord non-compliance, the FCRA provides that, 'a landlord who advertently fails to provide a required notice in an isolated case has legal protections so long as he or she can demonstrate that at the time of the'violation he maintained reasonable procedures to assure compliance.'
Accountable landlords should have set policies in place to provide prospective tenants with notices when private agencies check consumer information. It is important to remember that if a landlord has an employee check consumer information, a notice is not required under FCRA.
For More Information
For a copy of FCRA requirements, call 1-877-FTC-HELP or get a copy online at www.ftc.gov under 'Guidance.'
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