Federal Government to Investigate Tenant Screening Practice

Industry News,

The Federal Trade Commission and  Consumer Financial Protection Bureau Are Seeking Public Comment on How Background Screening May Shut Renters out of Housing

From Federal Trade Commission Press Release

The Federal Trade Commission (FTC) and  U.S. Consumer Financial Protection Bureau (CFPB) is asking the public to provide input on tenant screening practices and matters such as use of criminal and eviction records, algorithms used in tenant screening process, and alleged, adverse impact on underserved communities. According to a press release, “Renters are facing a range of challenges from rising rents to a shortage of affordable rental housing.” The FTC and CFPB are seeking public comment on background screening practices and their potential effect on people’s ability to obtain rental housing as part of a whole-of-government effort to address these issues.

“No one should be shut out of housing because of inaccurate or unfair background screening practices,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “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,” said Rohit Chopra, Director of the CFPB. “We will continue to work together to protect the integrity of our credit reporting system from sloppy background check companies."

As part of the Request for Information, 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; and
  • Whether there are ways to improve the current tenant screening process.

The FTC and CFPB are working closely to identify practices that may unfairly prevent consumers from obtaining and retaining housing, and comments to the Request for Information will help inform enforcement and policy actions under each agency’s jurisdiction. The Fair Credit Reporting Act, which the FTC and CFPB both enforce, also imposes requirements on many aspects of the tenant screening process.  The public will have 90 days to submit comments at Regulations.gov. Once submitted, comments will be posted to Regulations.gov.

The FTC, formed in 1914, is an independent agency of the United States government whose principal mission is the enforcement of civil antitrust law and the promotion of consumer protection. The FTC shares jurisdiction over federal civil antitrust enforcement with the Department of Justice Antitrust Division.