CFPB Reports Inaccurate Background Checks Are Increasing the Cost of Renting

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CFPB Reports Inaccurate Background Checks Are Increasing the Cost of Renting
December 3, 2022

A recent report from the Consumer Financial Protection Bureau (CFPB) revealed how inaccurate tenant screening reports had begun negatively impacting consumer lives. For example, such reports have increased renters’ prices. In addition, renters have experienced erroneous rejections because of inaccuracies.

Between January 2019 and September 2022, the CFPB received roughly 26,700 complaints regarding tenant screening, with the volume increasing year over year. Composing these, approximately 65% concern inaccurate information on tenant reports. In many cases, the most significant concern is having the issues with the report investigated and resolved.

Often, tenants must pay a fee for potential landlords to acquire a background check. Unfortunately, this fee does not get reimbursed even with a denied application. This practice proves true even after disputing the reasons for the denial. Though the average price for a tenant screening report is generally modest compared to a move, these fees add up. It grows incredibly strenuous when applicants are turned away and forced to submit more applications to other landlords.

In most cases, consumer reporting agencies (CRAs) directly provide reports to the landlords, and tenants typically do not receive a copy. This opacity is a component of many of the complaints received by the CFPB. According to several interviews by the bureau, many admitted they did not know what information appears in the reports. In addition, they did not realize the impact of the reports on their ability to acquire housing.

In most cases, these reports include details such as:

  • Identity verification
  • Criminal record search
  • Records of civil judgments
  • Credit report
  • Records of eviction
  • Employment verification
  • Sex offender registry check

Among the many complaints received, the bureau revealed at least one claim involved denying housing to individuals because of inaccuracies involving at least one of the items mentioned above. Other common issues include erroneously reported evictions, which never happened, and misdemeanors misclassified as felonies.

There have also been cases of individuals’ information getting mixed up, attributing the records of one individual to another. This confusion commonly occurs when a CRA uses name-only matching. Because of this issue, the CFPB stated that this practice fails to meet the accuracy requirements of the Fair Credit Reporting Act.

Furthermore, the bureau emphasized that inaccurate tenant screening reports harm individuals seeking housing. This harm is significant because large-scale corporate landlords who own a substantial share of available rental housing heavily rely on these reports.

The CFPB has stated that it will continue coordinating with the Federal Trade Commission to ensure accurate and compliant consumer reporting. As such, it has become increasingly crucial for landlords, employers, and others who use credit reports to find a background check provider they trust. The right provider will ensure that their practices comply with all federal and state requirements.

Interested in learning more about Pre-employ’s background checks? Talk to Sales today.