Tenant Screening Forum 11 10 2011

Background Checkmates: Unfair & Background Checkmates: Unfair & Abusive Tenant-Screening in WashingtonAbusive Tenant-Screening in Washington

Access to Housing ForumAccess to Housing Forum

Nov. 10, 2011Nov. 10, 2011

Seattle City HallSeattle City Hall

Eric Dunn, Staff AttorneyNorthwest Justice Project

401 Second Ave. S., Ste. 407Seattle, Washington Seattle, Washington 98104

Tel. (206) 464-1519, ext. 234Tel. (206) 464-1519, ext. [email protected]@nwjustice.org

A special type of credit report designed to A special type of credit report designed to assist a residential landlord in deciding assist a residential landlord in deciding whether to accept a rental applicantwhether to accept a rental applicant

Typical contents:Typical contents: Financial credit report (with or without score)Financial credit report (with or without score) Criminal background checkCriminal background check Civil litigation records checkCivil litigation records check Recommendation (approve/reject)Recommendation (approve/reject)

What is a “tenant-screening report?”What is a “tenant-screening report?”

Where do tenant-screeningWhere do tenant-screeningreports come from?reports come from?

““Specialty consumer reporting agencies” Specialty consumer reporting agencies” prepare and transmit reports to landlordsprepare and transmit reports to landlords Approximately 650Approximately 650 in USA (in USA (NY Times,NY Times, 11/26/2006) 11/26/2006)

No established industry standardsNo established industry standards No meaningful regulation by gov’t agencyNo meaningful regulation by gov’t agency FCRA provides some regulations on how reports FCRA provides some regulations on how reports

are prepared, what they may containare prepared, what they may contain But, FCRA is not designed for housing contextBut, FCRA is not designed for housing context

Some tenant-screening companies Some tenant-screening companies active in Washington…active in Washington…

Yes, but not until after you have already Yes, but not until after you have already applied for housing.applied for housing.

The FCRA only requires screening The FCRA only requires screening companies to show you the information companies to show you the information they already have on file about you.they already have on file about you. Tenant-screening companies ordinarily Tenant-screening companies ordinarily

prepare reports only for landlords. prepare reports only for landlords. Very few screening companies will prepare a Very few screening companies will prepare a

report for a consumer who orders itreport for a consumer who orders it

Can I see what’s in myCan I see what’s in mytenant-screening report?tenant-screening report?

What if there is a mistake onWhat if there is a mistake onmy tenant-screening report?my tenant-screening report?

Under the Under the Fair Credit Reporting ActFair Credit Reporting Act, a , a tenant-screening company has 30 days to tenant-screening company has 30 days to “reinvestigate” information that is disputed “reinvestigate” information that is disputed by a consumerby a consumer Disputed information must be deleted or Disputed information must be deleted or

corrected unless verified on reinvestigationcorrected unless verified on reinvestigation

Nothing prevents a landlord from renting Nothing prevents a landlord from renting the premises out to another person while a the premises out to another person while a consumer dispute is pendingconsumer dispute is pending

Can’t I just explain theCan’t I just explain theproblem to the landlord?problem to the landlord?

Yes, but:Yes, but: Under current law, a landlord does not have Under current law, a landlord does not have

to tell you why your application was deniedto tell you why your application was denied The landlord does not have to consider your The landlord does not have to consider your

explanation or evidenceexplanation or evidence

Categorical ExclusionsCategorical Exclusions

““It is the policy of 99 percent of our customers It is the policy of 99 percent of our customers in New York to flat out reject anybody with a in New York to flat out reject anybody with a landlord-tenant record, no matter what the landlord-tenant record, no matter what the reason is and no matter what the outcome is, reason is and no matter what the outcome is, because if their dispute has escalated to because if their dispute has escalated to going to court, an owner will view them as a going to court, an owner will view them as a pain,” said Jake Harrington, a founder of On-pain,” said Jake Harrington, a founder of On-Site.com…”Site.com…”

----New York Times,New York Times, Nov. 26, 2006 Nov. 26, 2006

If I correct an error on my tenant-If I correct an error on my tenant-screening report with one company,screening report with one company,will that correction be reported to thewill that correction be reported to theother screening companies?other screening companies?

No. To prevent the error from No. To prevent the error from recurring, you may have to contact other recurring, you may have to contact other screening companies separately.screening companies separately. Remember, ~ 650 operate in the USA.Remember, ~ 650 operate in the USA.

Where do tenant-screeners get Where do tenant-screeners get their information (from huh)?their information (from huh)?

Other consumer reporting agenciesOther consumer reporting agencies Credit bureaus (Experian, Equifax, TransUnion)Credit bureaus (Experian, Equifax, TransUnion) Criminal records (ChoicePoint, USIS, et al.)Criminal records (ChoicePoint, USIS, et al.)

Public recordsPublic records Law enforcement databasesLaw enforcement databases Judicial records systemsJudicial records systems Other government recordsOther government records

Interviews with past landlords, othersInterviews with past landlords, others Miscellaneous sourcesMiscellaneous sources

Are errors common inAre errors common intenant-screening reports?tenant-screening reports?

79% of “Big 3” credit reports have errors, 79% of “Big 3” credit reports have errors, about ¼ of which are significant enough to about ¼ of which are significant enough to result in an improper denial of creditresult in an improper denial of credit Mistakes Do Happen: A Look at Errors in Consumer Credit

Reports, U.S. PIRG: The Federation of State PIRGS (2004)

Tenant-screening reports that are derived from credit reports will generally replicate the errors in the underlying source

Accurate but unfair information can be equalluy damaging but is not prohibited

What kinds of informationWhat kinds of informationdo screening companiesdo screening companiesuse public records for?use public records for?

Criminal recordsCriminal records Civil Litigation recordsCivil Litigation records

Evictions (most common)Evictions (most common) Bankruptcy/Foreclosure/CollectionsBankruptcy/Foreclosure/Collections Tenant-plaintiff (sec. dep., repair, discrimination)Tenant-plaintiff (sec. dep., repair, discrimination) Protection orders (DV, anti-harassment, etc.)Protection orders (DV, anti-harassment, etc.)

Are public records accurate?Are public records accurate?

Public records are often created for some Public records are often created for some purpose other than serving as de facto purpose other than serving as de facto consumer reports.consumer reports.

Even when technically accurate, public Even when technically accurate, public records are seldom complete and up-to-daterecords are seldom complete and up-to-date

Public records systems often lack Public records systems often lack procedures for correcting or removing procedures for correcting or removing harmful information.harmful information.

SCOMIS: A virtual blacklist

Washington’s “SCOMIS” search result screen

I was sued for eviction butI was sued for eviction butI won my case. That won’t affect I won my case. That won’t affect

my rental opportunities, right?my rental opportunities, right?

• Response to dispute letter sent on behalf of rental applicants who had been turned-down due to a record of an eviction suit they had won on the merits.

I’ve never had a problem with a I’ve never had a problem with a landlord. How does this affect me?landlord. How does this affect me?

Most rights belonging to tenants can only be Most rights belonging to tenants can only be enforced through litigationenforced through litigation

Tenants are chilled from litigating meritorious Tenants are chilled from litigating meritorious claims and defenses because they are claims and defenses because they are blacklisted for simply appearing in courtblacklisted for simply appearing in court

Landlords can (and do) exploit this situation Landlords can (and do) exploit this situation by taking illegal actions against tenantsby taking illegal actions against tenants

Tenant-Screening ReportsTenant-Screening Reports

Tenant-Screening: CostsTenant-Screening: Costs

Tenant-screening reports typically cost Tenant-screening reports typically cost about $30-$75 per adult applicantabout $30-$75 per adult applicant

State law allows landlords to pass 100% of State law allows landlords to pass 100% of their screening costs on to applicantstheir screening costs on to applicants

Applicants who are turned-down must Applicants who are turned-down must usually pay screening fees over again to usually pay screening fees over again to apply elsewhere, even though the landlord apply elsewhere, even though the landlord will use the fees to purchase reports that will use the fees to purchase reports that contain substantially identical informationcontain substantially identical information

What can be done?What can be done? Improve advance access to reportsImprove advance access to reports

Enable consumers to dispute inaccurate or incomplete Enable consumers to dispute inaccurate or incomplete information information beforebefore they apply for housing they apply for housing

Curb reporting that conflicts with public policyCurb reporting that conflicts with public policy Evictions where tenant prevails, tenant-plaintiff litigationEvictions where tenant prevails, tenant-plaintiff litigation DV, other victim-protection recordsDV, other victim-protection records

Greater controls on public recordsGreater controls on public records Consumers should be able to correct, updateConsumers should be able to correct, update

Bring screening costs under controlBring screening costs under control Limit fees or only allow fees when tenancy is offeredLimit fees or only allow fees when tenancy is offered Allow reusable “portable” screening reportsAllow reusable “portable” screening reports