CFPB and FTC Remain Focused on the Effect of Background Screening on Tenants

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CFPB and FTC Remain Focused on the Effect of Background Screening on Tenants
March 16, 2023

The Federal Trade Commission (FTC) and Consumer Financial Protection Bureau (CFPB) have issued a Request for Information. This Request seeks public comment on how background screening affects individuals seeking housing in the United States. For example, they want information about credit scores and consumer report usage. They also want to discuss eviction, criminal records, and algorithms in tenant screening.

This Request is not the first time the CFPB and FTC have taken concerning tenant screening. Previously, the CFPB issued two reports discussing what the bureau sees as common errors in tenant background checks. The bureau also discussed how they believe these errors might affect potential renters. Because of these reports, the CFPB said they would work with the FTC to address these issues.

A press release with the Request stated that the CFPB received thousands of complaints concerning tenant background checks. For example, many people shared stories about someone else’s adverse information in their consumer reports. As such, they could not obtain housing and struggled to get tenant screening companies to correct these errors. Another problem mentioned involved learning what information screening and housing providers considered when creating risk scores.

Based on what the agencies learned, they have compiled the following information to follow up on:

  • “How landlords and property managers use criminal and eviction records in making housing decisions;
  • How potential inaccuracies in criminal and other records affect rental housing decisions;
  • Whether consumers receive information about the criteria used in tenant screening or notifications about what information in their background check led to their rejection;
  • How landlords and property managers set application and screening fees;
  • How algorithms, automated decision-making, artificial intelligence, or similar technology affect the tenant screening process; and
  • How to improve the current tenant screening process.”

The CFPB and FTC want to identify practices that could unfairly prevent consumers from obtaining and keeping housing. The comments these agencies receive will help determine enforcement actions for the agencies. The interest in improving individuals’ ability to acquire housing comes from the agencies’ roles in enforcing the Fair Credit Reporting Act (FCRA). This Act regulates tenant screening processes, hence the desire for public comments on how to improve regulations. However, the public will have 90 days to submit comments.

This Request shows the increasing importance both the CFPB and FTC place on enforcing tenant screening regulations. The best way for landlords and property managers to ensure they comply with all applicable rules and regulations is to partner with a background check company they can trust.

Discover the benefits of Pre-employ’s seamless background checks for your business. Contact a Sales representative today.