The Federal Trade Commission (FTC) is offering guidance for landlords, property managers, and other housing providers who may run background checks on prospective tenants that “can include rental and eviction history, credit history, criminal records, and more” in a Business Blog titled “Tenant Background Check Reports” that is available on the FTC website.
Written by Attorney Amanda Koulousias of the FTC Division of Privacy and Identity Protection, the guidance posted in July 2023 explains how tenant background checks from Consumer Reporting Agencies (CRAs) are consumer reports and that landlords “have certain responsibilities” when using them to comply with the federal Fair Credit Reporting Act (FCRA).
“What if the information in a consumer report leads you to deny housing to the applicant or require them to pay a deposit you wouldn’t make other applicants pay? Under the Fair Credit Reporting Act, you must inform applicants in what’s called an adverse action notice. That’s true even if the report was only a minor factor in your decision,” the guidance states.
“An adverse action notice tells people about their rights to see information being reported about them and to dispute inaccurate information,” the guidance goes on to explain. “It’s a best practice to provide that adverse action notice in writing because it benefits both you and the applicant. Written notices give you proof of compliance with the law.”
Adverse action notices also enable applicants to assert their rights to request a copy of the report from the CRA and to dispute any mistakes. The FCRA specifies the information to be included in an adverse action notice and details other responsibilities for using consumer reports. To learn more, read the FTC Guidance “Using Consumer Reports: What Landlords Need to Know.”
ClearStar is a leading global Human Resources technology company that specializes in background checks, drug testing, and occupational health screening. ClearStar offers FCRA-compliant tenant background screening services that help landlords protect rental properties. For more information about tenant background screening services, please contact ClearStar.
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