Federal Trade Commission (FTC) Offers Guidance for Tenant Background Checks


Federal Trade Commission (FTC) Offers Guidance for Tenant Background Checks

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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    Thomas Ahearn - Digital Content Editor

    Thomas Ahearn is a Digital Content Editor at ClearStar, a leading Human Resources technology company specializing in background checks, drug testing, and occupational health screening. He writes about a variety of topics in the background screening industry including Artificial Intelligence (AI), "Ban the Box," class action lawsuits, credit reports, criminal records, drug testing, Equal Employment Opportunity Commission (EEOC), Fair Credit Reporting Act (FCRA), identity theft, privacy, social media screening, and workplace violence.

    At ClearStar, we are committed to your success. An important part of your employment screening program involves compliance with various laws and regulations, which is why we are providing information regarding screening requirements in certain countries, region, etc. While we are happy to provide you with this information, it is your responsibility to comply with applicable laws and to understand how such information pertains to your employment screening program. The foregoing information is not offered as legal advice but is instead offered for informational purposes. ClearStar is not a law firm and does not offer legal advice and this communication does not form an attorney client relationship. The foregoing information is therefore not intended as a substitute for the legal advice of a lawyer knowledgeable of the user’s individual circumstances or to provide legal advice. ClearStar makes no assurances regarding the accuracy, completeness, or utility of the information contained in this publication. Legislative, regulatory and case law developments regularly impact on general research and this area is evolving rapidly. ClearStar expressly disclaim any warranties or responsibility or damages associated with or arising out of the information provided herein.


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