A new enforcement action provides more detail on the expectations of the Consumer Financial Protection Bureau (CFPB) and Federal Trade Commission (FTC) (collectively, the agencies) for the content of tenant screening reports.

As previously discussed here, according to its annual 10-K report Trans Union LLC has been “in active settlement discussions” with the agencies since 2022 over alleged Fair Credit Reporting Act (FCRA) compliance lapses related to its tenant screening reports. Just last week, the FTC announced the parties reached an agreement that will require Trans Union and its subsidiary TransUnion Rental Screening Solutions, Inc. (TURSS) to pay a total of $15 million to settle the agencies’ allegations the company’s tenant screening reports included inaccurate and incomplete eviction records. The settlement also requires Trans Union and TURSS to implement procedures to ensure the accuracy of the eviction information provided in tenant screening reports as well as disclose the source of that information to consumers upon request.

Specifically, the complaint in the FCRA action filed in the U.S. District Court for the District of Colorado alleged that in its tenant screening reports TURSS failed to follow reasonable procedures to: (1) prevent the inclusion of multiple entries for the same eviction case; (2) accurately report the eviction case disposition; (3) accurately label data fields in eviction proceeding records, and (4) prevent the inclusion of sealed eviction proceedings. The complaint further alleged that in numerous instances where TURSS obtained criminal and eviction proceeding records from third-party vendors, TURSS failed to identify the third-party vendor as a source of the information in file disclosures to consumers. According to the agencies, this made it harder for consumers to correct errors in their reports. Notably, many of these same issues were raised by plaintiffs in a Georgia multidistrict class action, In re TransUnion Rental Screening Solutions, Inc. FCRA Litigation. Specifically, plaintiffs alleged that TURSS “did not employ reasonable procedures to ensure the maximum possible accuracy of the information it reports regarding consumers.” The final class action settlement was approved by the Northern District of Georgia on October 3.

Pursuant to the parties’ agreement, Trans Union and TURSS neither admit nor deny the allegations. If the proposed order is approved by the federal court, TURSS and Trans Union will be required to:

  • Pay $11 million to compensate consumers;
  • Pay a $4 million civil penalty to the CFPB’s civil penalty fund;
  • Put in place procedures to assure the accuracy of eviction information provided in tenant screening reports;
  • Put in place procedures to prevent the inclusion of unresolved eviction cases, multiple filings for a single eviction case, and any monetary amounts other than final judgments;
  • Disclose the sources of information in a consumer’s file, including third-party vendors;
  • Put in place procedures that will help identify future problems with criminal and eviction records and take corrective steps to fix them;
  • Upon receiving a request from a consumer, provide all the information in their file at no charge, including any information that TURSS might provide to a landlord or property manager; and
  • Provide a sample “adverse action notice letter” on TURSS’s website that landlords can use when they reject a housing application, which will prompt the landlord to share the applicant’s tenant screening report and provide the reasoning behind the denial of the application.

Our Take:

This settlement represents a continued emphasis by the FTC and CFPB on issues relating to tenant screening. As discussed here, on February 28, the FTC and CFPB jointly issued a Request for Information, seeking public comment on how background screening affects individuals seeking rental housing in the United States. Three months prior, the CFPB issued two reports, discussed here, highlighting what the CFPB perceives to be forms of errors that frequently occur in tenant background checks and the impacts the CFPB believes that those errors can have on potential renters. We expect this focus on tenant screening to continue and more investigations and related enforcement actions to follow.

 

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 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 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 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.