A federal agency warns landlords to take care in screening renters
TOPICS: Background Checking
Landlords who do background screening to size up tenant applicants need to take care to avoid running afoul of the law, the Federal Trade Commission said in a recent public report.
The main U.S. law that kicks in is the Fair Credit Reporting Act, which, among other things, governs background screening reports (or “consumer reports”) that are used to help determine someone’s suitability for a home, a job, a loan, an insurance policy and the like. The FCRA law states that if a landlord uses a consumer report in rejecting a prospective tenant, raising rents or rental deposits, requiring a co-signer, or taking some other “adverse action,” then the applicant or renter must be informed of his or her right to dispute the accuracy of the report, the FTC’s guidance said.
After using the report, the landlord also has to destroy the paper report or delete the digital information “so that it can’t be read or reconstructed,” the agency added. A landlord who carries out background screening by interviewing third parties about an applicant’s reputation or character must give the applicant “a summary of the scope and substance of the report,” under the law.
The FTC added that any landlord with “a blanket policy of refusing to rent to anyone with a criminal record” might be breaking another law, the U.S. Fair Housing Act. It’s a legally complex landscape, which might be the reason the FTC titled its report, “What landlords need to know.”