The Consumer Financial Protection Bureau (CFPB) and Federal Trade Commission (FTC) announced on October 12 that they are ordering a rental screening subsidiary of the consumer credit reporting agency TransUnion to pay $23 million for illegal rental and credit reporting practices.
The tenant screening and background reporting industry is rife with unscrupulous practices that can result in misleading, inaccurate, incomplete, and incorrect information being included in an individual’s screening report. For example, a recent report by the National Consumer Law Center (NCLC) found that consumer reporting agencies sometimes fail to report accurate eviction or criminal records; mix up the records of two people with the same or similar names; and report sealed or expunged records that should be inadmissible. Screening agencies also typically provide a score or recommendation as to whether a landlord should rent to a particular applicant but do not usually detail what information was used to determine the recommendation. As a result, tenants who are denied housing have little to no ability to refute inaccurate or incomplete information included in their report.
CFPB and FTC found that TransUnion’s tenant screening subsidiary violated the “Fair Credit Reporting Act” (FCRA) by failing to take adequate steps to ensure that rental background reports contain accurate information. The company also withheld details from renters about where the company gets its information, making it difficult, if not impossible, for renters to refute and correct inaccurate information. CFPB and FTC are ordering TransUnion to pay $15 million and to make “significant improvements” in its reporting mechanisms.
In addition, CFPB is ordering TransUnion to pay another $8 million for lying to tens of thousands of consumers about placing or removing “security freezes” on their reports. Security freezes help prevent potential identity theft by blocking third parties from accessing consumers’ credit reports. Consumers who had requested a security freeze were told by TransUnion their request had been completed, while the requests were actually filed into a yearslong backlog.
“Americans across the country were put at risk of wrongful housing denials because TransUnion failed to follow the law,” said CFPB Director Rohit Chopra in a press statement. “We are ordering TransUnion to cease its yearslong illegal activity, clean up its broken business practices, redress its victims, and pay penalties.”
“Consumers struggling to find housing shouldn’t be shut out by tenant screening reports that are ridden with errors and based on data from secret sources,” said Samuel Levine, director of the FTC’s Bureau of Consumer Protection. “Protecting consumers looking for housing is critical to a fair economy, and we are proud to partner with the CFPB in obtaining this record-breaking order.”
NLIHC submitted a comment to CFPB and FTC detailing how tenant background screening practices frequently shut people out of housing, in particular members of historically underserved and marginalized communities. The Partnership for Just Housing, co-led by NLIHC and the Shriver Center on Poverty Law, also submitted a comment to CFPB and FTC highlighting the specific impact of tenant screening practices on housing access for formerly incarcerated and convicted people.