The Federal Trade Commission (“FTC”) recently issued guidance applicable to background screening companies (aka consumer reporting agencies) who engage in tenant screening.  The FTC highlights four key responsibilities of background screening companies covered by the Fair Credit Reporting Act (“FCRA”), specifically:

  • “Follow reasonable procedures to ensure accuracy.
  • Get certifications from your clients.
  • Provide your clients with information about the FCRA.
  • Honor the rights of applicants and tenants.”

For background screening companies I encourage you to look at those responsibilities as described in the guidance carefully because the FTC opines on what “reasonable procedures to ensure accuracy” are and those should be read to apply to employment screening as well.  The FTC states, “[c]ertain practices may be indicators that a background screening company isn’t following reasonable procedures. For example, if a report lists criminal convictions for people other than the applicant or tenant – for instance, a person with a middle name or date of birth different from the applicant’s – that raises FCRA compliance concerns. Other examples that raise FCRA compliance concerns include screening reports with multiple entries for the same offense or that list criminal records that have been expunged or otherwise sealed.  Another indication that a company’s procedures might not be reasonable are reports that list housing court actions, but do not include the outcome of the action – for instance, that a case was resolved in the tenant’s favor.”

Background screeners–notice that the FTC calls out reports with multiple entries for the same offense, the reporting of expunged or sealed records, reports with no dispositions, and finally, the failure to use a middle name to ensure accuracy.