The FTC recently released a new Screening guidance for Landlords and the companies that perform background check services. The guidance helps all parties comply with the Fair Credit Reporting Act when performing potential tenant screenings. Here’s some key components:
Landlords must take certain steps both before getting a consumer report and after taking an adverse reaction based on the report.
- Consumer reports can include credit reports, rental history reports, or criminal history reports
- Landlords can only get consumer report if they have a “permissible purpose,” like tenant screening
- The Landlord must certify to the providing company that the report will only be used for housing purposes
If the Landlord takes adverse action against a tenant or rental applicant after the report, they must give oral, written, or electronic notice
- Adverse actions may include: denying a lease, requiring a co-signor, or requiring higher rent than for another applicant. The FTC’s guidance lists more examples
- Notice must include contact information for the company that supplied the report, and an explanation of the right to dispute the report
Want more details? Here’s a link to the FTC’s Guidance on Consumer Reports for Landlords. You can also review the regulations that background screening companies are required to follow here.