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Section 607(b) of the Fair Credit Reporting Act requires consumer reporting agencies to follow reasonable procedures to assure maximum possible accuracy of consumer report information concerning the person in question. “Reasonable procedures to assure maximum possible accuracy” isn’t a wish, a hope, or a lofty aspiration. It’s the law. A proposed $15 million FTC-CFPB settlement with Trans Union and its subsidiary TransUnion Rental Screening Solutions underscores that fundamental legal principle.

Operating under Tran Union’s management and oversight, TransUnion Rental Screening Solutions (TURSS) provides background screening reports about consumers to rental property owners, property management companies, employers, and other background screening companies. Those reports may include a person’s criminal record, as well as information about their history of eviction – information that many landlords would consider highly relevant in evaluating a consumer’s rental application. Defendant TURSS buys eviction records from third-party vendor LexisNexis Risk and Information Analytics Group.

Given the likelihood that landlords will factor eviction records into their ultimate rental decision, it’s easy to see that inaccurate and outdated information can make it much harder for people to find housing. Misinformation in eviction records can result in longer searches for a place to live, additional application fees, possible expenses for temporary housing, and higher rent payments. Add to that the substantial effort it can take to correct misinformation in background reports and you can see why eviction-related inaccuracies can cause major housing headaches for consumers.

But according to the complaint, in many cases, TURSS’ lack of reasonable procedures in preparing its background screening reports resulted in those very inaccuracies. TURSS’ procedures allegedly double-counted – or even multi-counted – the events associated with one eviction proceeding in a way that made it look like a consumer had been subject to multiple evictions. In some instances, the company’s reports wrongly stated there had been a judgment in the landlord’s favor when the matter had actually been dismissed, or stated that an eviction had been initiated, but didn’t include public information about how it had been resolved, even if it was months or years before. And under the label “Judgment Amount,” the company sometimes listed the amount the landlord asked for, not the amount a court actually ordered. The company also had no procedures to prevent sealed records from appearing in its reports when an eviction was more than a year old, but the only record was a “civil new filing,” even though it was on notice that its ordinary processes wouldn’t work.

The real-world upshot for consumers: due to the company’s practices, the background screening reports many landlords received contained inaccurate information about a prospective tenant’s eviction history. Thus, the complaint charges that the defendants violated Section 607(b) of the Fair Credit Reporting Act by failing to follow reasonable procedures to assure maximum possible accuracy of information covered under the FCRA.

In addition to Section 607(b) allegations, Count 2 of the complaint charges that the defendants violated Section 609(a) of the FCRA, which requires consumer reporting agencies to “clearly and accurately disclose to the consumer . . . all information in the consumer’s file at the time of the request” and the “sources of the information.” This statutory “File Disclosure” requirement helps consumers dispute inaccuracies at the source – a key protection to reduce the likelihood that the source will simply keep disseminating the same inaccuracies over and over again or to other customers. But the complaint charges that in numerous instances, TURSS’ required File Disclosures failed to identify its third-party vendors as a source of criminal and eviction records. Although the company has since changed its practices, the complaint characterizes TURSS’ failure to disclose required information as “knowing and reckless.”

If the court accepts the proposed settlement, TURSS and Trans Union will pay $11 million, which will be used for consumer redress, and an additional $4 million, which will go to the CFPB’s civil penalty fund. What’s more, the proposed order will impose far-reaching changes in how TURSS and Trans Union do business. Among other things:

• The defendants must put procedures in place to ensure the accuracy of information they provide about consumers in background screening reports, particularly eviction-related information.
• The defendants must make changes that specifically address the eviction-related inaccuracies alleged in the complaint. For example, TURSS must put in place procedures to ensure its background screening reports include only one entry per eviction action and must stop the injurious multiple-counting charged in the complaint. Also, TURSS’ reports will include only final dispositions. If there is no final disposition – for example, if a landlord files a case, but abandons the matter without a court hearing – TURSS won’t report that eviction case. In addition, TURSS will report judgment amounts only for evictions. The company won’t report just what a landlord alleged or the balance a consumer still owes if they have fully or partially paid it off. And TURSS will put in place procedures to prevent reporting sealed records.
• The defendants are also required to take steps that will empower consumers to exercise their rights under the FCRA and fix inaccurate information. Among other things, TURSS must provide free File Disclosures. What’s more, they must include in them any information that it possesses at the time of the request that TURSS might provide to a landlord or property manager. The defendants also must disclose the sources of that information and must identify third-party vendors. And the defendants must post a sample “adverse action notice letter” available on TURSS’ website that landlords can use when they turn down applicants for housing. The letter will suggest that landlords provide the tenant screening report they received and tell the applicant the principal reasons for denying them housing.

The proposed settlement includes notable compliance advice for companies covered by the Fair Credit Reporting Act. Most importantly, Section 607(b) means what it says. The FCRA’s requirement of “reasonable procedures to assure maximum possible accuracy” obliges covered companies to implement effective processes, ensure those processes are operating effectively, and act quickly in the face of evidence – for example, consumer disputes – that those procedures aren’t resulting in “maximum possible accuracy.” Credit reporting agencies also shouldn’t limit their reasonable procedures to ensuring accuracy of the “who” records are about (also known as “matching”), but also the “what” – the content of those records – even if the consumer would have something negative on their report either way.