By choosing to background screen a prospective tenant, a landlord chooses to be subject to the federal Fair Credit Reporting Act (FCRA), along with a host of state and local privacy and consumer protection laws. The FCRA is a law designed to protect consumers in situations where any form of “consumer report” is issued and used for the purpose of making decisions that could adversely impact the consumer in matters involving consumer credit, employment, household living, financial, insurance and other similar consumer-initiated transactions.
Tenant screening reports typically include the following:
- A request for the applicant’s credit history
- Record of any previous evictions
- Any history of writing bad checks or committing other forms of fraud or misrepresentation
- Any history of sexual offenses, property crimes, drug-related criminal offenses, or other crimes that impact a decision to allow someone to rent property
- Verification of employment or previous tenant relationships
- Even tenant references from other property owners or managers
All of this information is contained in a tenant report that, when requested from a third party is subject to the FCRA.
Read the following for the definition of a “consumer report” under the FCRA, which is provided at 15 USC Sec. 1681(a)(d):
“The term “consumer report” means any written, oral, or other communication of any information by a consumer reporting agency bearing on a consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living which is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer’s eligibility for (A) credit or insurance to be used primarily for personal, family, or household purposes….”
As a user of a “consumer report” (or in this case we can call it a “background check” or a “tenant screening report”), the landlord must establish compliance with the FCRA.
Want more information on how to comply with the FCRA, or more tips on screening your tenants? Watch our full webinar “Residential Screening – What Every Landlord Should Know.” Click here to go to our webinar library.