On February 28, the Federal Trade Commission (FTC) and Consumer Financial Protection Bureau (CFPB) jointly issued a Request for Information, seeking public comment on how background screening affects individuals seeking rental housing in the United States. Specifically, the Request seeks information on the use of consumer reports and credit scores, criminal and eviction records, and algorithms in the tenant screening process.

This is just the latest action from the FTC and CFPB on the issue of tenant screening. As discussed here, on November 15, the CFPB issued two reports, highlighting what it perceived to be forms of errors that frequently occur in tenant background checks and the impact the CFPB believed those errors could have on potential renters. As a result of the reports, the CFPB pledged to work closely with the FTC to take action on those issues.

According to the press release that accompanied the release of the Request, the “CFPB has received thousands of complaints about tenant background checks and heard many stories of people being rejected from housing because someone else’s negative information, like a criminal record or eviction, incorrectly appeared in their report. Other complaints have highlighted how difficult it can be to have tenant screening companies fix errors. Finally, people tell us they can’t find out what information factors into the ‘risk scores’ used to deny them rental housing.”

On this basis, the agencies seek information about:

  • Tenant Screening Generally.
    • How are landlords and property managers currently setting criteria and using background screening products to assess prospective tenants? To what extent are they informing prospective tenants about their criteria?
    • To what extent do landlords and property managers address barriers for prospective tenants with limited English proficiency or disabilities?
    • Do tenant screening practices have unique impacts on certain groups or communities, such as Black, Indigenous, and people of color; the LGBTQI+ community; military service members; immigrants; public housing voucher recipients; or renters with disabilities?
  • Criminal and Eviction Records in Tenant Screening.
    • How do landlords and property managers obtain this information? Do they ask prospective tenants about their backgrounds or purchase background reports?
    • How accurate are these records and how useful or relevant are they in assessing whether a particular individual is more likely to have a negative housing outcome?
  • Using Algorithms in Tenant Screening.
    • How are consumer reporting agencies using algorithms to match credit, criminal, and eviction records to consumers for inclusion on credit and tenant screening reports, and making predictions about prospective tenants?
    • Where is the data obtained for use in these algorithms?
    • What steps are being taken to ensure that algorithms that make recommendations about prospective tenants are not discriminating based on race, sex, disability, or other protected class?
    • To what extent do consumer reporting agencies allow tenants to dispute the recommendation produced by an algorithm? To what extent do landlords or property managers re-assess housing applications following a tenant’s dispute or correction of scoring criteria or underlying data?

The deadline for comments is May 30.

The FTC and CFPB have also taken aim at tenant screening issues through enforcement actions. As discussed here, in March 2022, TransUnion received a Notice and Opportunity to Respond and Advise letter from the CFPB alleging that the company and its tenant and employment screening business TransUnion Rental Screening Solutions, Inc. failed to: “(i) follow reasonable procedures to ensure maximum possible accuracy of information in consumer reports and (ii) disclose to consumers the sources of such information.” On July 27, 2022, the CFPB advised TransUnion that it had obtained authority to pursue a joint enforcement action with the FTC. TransUnion is now in active settlement discussions with the federal regulators.

Troutman Pepper will continue to monitor developments involving the FTC and CFPB related to tenant screening and will provide further updates as they become available.

Photo of David N. Anthony David N. Anthony

David Anthony handles litigation against consumer financial services businesses and other highly regulated companies across the United States. He is a strategic thinker who balances his extensive litigation experience with practical business advice to solve companies’ hardest problems.

Photo of David M. Gettings David M. Gettings

Dave is a partner of the firm who focuses on defending clients in consumer class actions and complex commercial litigation nationwide, particularly cases involving a variety of federal and state laws and regulations, including the Fair Credit Reporting Act (FCRA), the Telephone Consumer

Dave is a partner of the firm who focuses on defending clients in consumer class actions and complex commercial litigation nationwide, particularly cases involving a variety of federal and state laws and regulations, including the Fair Credit Reporting Act (FCRA), the Telephone Consumer Protection Act (TCPA) and associated FCC regulations, the Fair Debt Collection Practices Act, the Truth in Lending Act, the Electronic Fund Transfer Act, and many similar state consumer protection statutes.

Photo of Ronald I. Raether, Jr. Ronald I. Raether, Jr.

Ron leads the firm’s Privacy + Cyber team. Drawing from nearly 30 years of experience, he provides comprehensive services to companies in all aspects of privacy, security, data use, and risk mitigation. Clients rely on his in-depth understanding of technology and its application

Ron leads the firm’s Privacy + Cyber team. Drawing from nearly 30 years of experience, he provides comprehensive services to companies in all aspects of privacy, security, data use, and risk mitigation. Clients rely on his in-depth understanding of technology and its application to their business to solve their most important challenges — from implementation and strategy to litigation and incident response. Ron and his team have redefined the boundaries of typical law firm privacy and cyber services in offering a 360 degree approach to tackling information governance issues. Their holistic services include drafting and implementing bespoke privacy programs, program implementation, licensing, financing and M&A transactions, incident response, privacy and cyber litigation, regulatory investigations, and enforcement experience.

Photo of Tim J. St. George Tim J. St. George

Tim defends institutions nationwide facing class actions and individual lawsuits. He has particular experience litigating consumer class actions, including industry-leading expertise in cases arising under the Fair Credit Reporting Act and its state law counterparts, as well as litigation arising from data breaches.

Photo of Alan D. Wingfield Alan D. Wingfield

Alan Wingfield helps consumer-facing clients navigate compliance, litigation and regulatory risks posed by the complex web of state and federal consumer protection laws. He is a trusted advisor and tireless advocate, helping clients develop practical compliance and dispute-resolution strategies.

Photo of Julie D. Hoffmeister Julie D. Hoffmeister

Julie is a partner primarily focusing on financial services litigation. She defends consumer-facing companies of all types in individual claims and class actions, including claims under the Fair Credit Reporting Act (FCRA), the Driver’s Privacy Protection Act (DPPA), and the Telephone Consumer Protection…

Julie is a partner primarily focusing on financial services litigation. She defends consumer-facing companies of all types in individual claims and class actions, including claims under the Fair Credit Reporting Act (FCRA), the Driver’s Privacy Protection Act (DPPA), and the Telephone Consumer Protection Act (TCPA). Julie also applies her litigation knowledge in assisting businesses in developing compliance processes and procedures for the myriad federal consumer protection laws.