On February 28, 2023, the Federal Trade Commission (“FTC”) and Consumer Financial Protection Bureau (“CFPB”) issued a Request for Information (“RFI”) seeking public comment on background screening issues affecting rental housing applicants and tenants in the United States. The 10-page RFI, which the FTC described as “part of a whole-of-government effort” to address a range of challenges facing renters, poses nearly 100 different questions exploring the tenant screening process generally and, more specifically, the use of criminal records, eviction records, and algorithms or other automated decision-making technologies in the screening process. The RFI makes good on the January 2023 Blueprint for a Renter Bill of Rights white paper (the “Blueprint”) published by the White House Domestic Policy Council and National Economic Council (the “Council”) that was intended to support the development of policies and practices that promote fairness for Americans living in rental housing.
What You Need to Know:
- In February 28, 2023, the FTC and CFPB issued an RFI seeking public comment on background screening issues affecting rental housing applicants in the United States, including information concerning the use of credit reports, credit scores, and criminal and civil (including eviction) public records in tenant screening; the use of algorithms in making tenant screening decisions; the use of tenant screening recommendation products developed, marketed, or sold by consumer reporting agencies; and other tenant screening issues.
- The RFI makes good on the January 2023 Blueprint for a Renter Bill of Rights white paper published by the White House Domestic Policy Council and National Economic Council and is part of what the FTC has characterized as “a whole-of-government effort” intended to support the development of policies and practices to promote fairness for Americans living in rental housing, including by addressing challenges securing rental housing due to “inaccurate or unfair background screening practices.”
- Comments may be submitted here and must be submitted by May 30, 2023.
The Blueprint referenced the FTC’s recent announcement that it will explore how to expand the use of its authority under the FTCA to take actions against practices that unfairly prohibit consumers from obtaining and maintaining housing. The Blueprint also referenced CFPB’s statement that it would work to develop guidance or rules to ensure the background screening industry adheres to the law and to coordinate enforcement efforts with the FTC to ensure that background check companies employ reasonable procedures and provide accurate information in the credit reporting system. CFPB also expressed its intent to coordinate with federal and local government agencies to ensure that tenant screening companies do not illegally disseminate false and misleading information about tenants and that tenants have a mechanism to challenge such information. Moreover, a number of other federal agencies, including the Department of Housing and Urban Development (“HUD”), have stated that they will coordinate with CFPB to develop best practices on the use of tenant screening reports, including appropriate communication to tenants regarding associated fees and application decisions.
The follow-up RFI is intended to obtain data to assist the FTC and CFPB in identifying specific practices that inhibit fair rental housing and the resulting harms to both housing applicants and current tenants in order to develop enforcement and policy strategies. The questions in the RFI provide insight as to the FTC’s and CFPB’s particular areas of focus, including:
- How criminal and eviction records are used by landlords and property managers in making rental housing decisions;
- How potential inaccuracies in criminal and other records affect rental housing decisions;
- Whether consumers are informed about the criteria used in tenant screening or notified about what information in their background check led to their rejection;
- How landlords and property managers are setting application and screening fees;
- How algorithms, automated decision-making, artificial intelligence, or similar technology are used in the tenant screening process; and
- Whether there are ways to improve the current tenant screening process.
While many in the industry are well aware of HUD’s oversight and, as to the issue of tenant background screening specifically, HUD’s 2016 and 2022 guidance concerning the intersection of screening practices and the Fair Housing Act, the industry must also monitor the FTC’s, CFPB’s, and other federal agencies’ continued focus on practices that inhibit consumers’ ability to obtain and secure rental housing.
The FTC and CFPB have invited all interested individuals to submit comments about these issues generally and/or in response to the various questions posed in the RFI. Tenants, prospective tenants, and tenants’ rights and housing advocacy groups are invited and expected to submit comments. Industry participants including residential and commercial owners, developers, property managers, consumer reporting agencies, and landlord-side industry trade groups should consider providing comments to the RFI in anticipated response thereto. Comments may be submitted here and must be submitted by May 30, 2023.