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When people are looking to rent a house or apartment, the most important “screening” isn’t on the windows of the prospective new place. It’s the tenant background screening that goes on behind the scenes, the results of which can make the difference between home sweet home and homeless.

The FTC announced a record-setting $3 million settlement with Texas-based RealPage, Inc., a consumer reporting agency (CRA) that offers tenant background screening services. According to the complaint, the company violated the Fair Credit Reporting Act’s requirement that CRAs follow reasonable procedures to assure maximum possible accuracy. The FTC alleges that the company’s failure to honor that key FCRA provision caused major problems for consumers unfortunate enough to have names or birthdates similar to people with criminal records.

RealPage furnishes background reports on prospective tenants to landlords and property management companies across the country. Among other things, the reports typically included applicants’ rental or eviction histories, credit data from the three major CRAs, and information about their criminal records.

Of course, lots of people have similar names, birthdates, etc. That’s one reason why Section 607(b) of the FCRA requires that “whenever a consumer reporting agency prepares a consumer report it shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates.” The FTC alleges that RealPage’s automated system used to “match” housing applicants with criminal record data stored in RealPage’s databases or in public records led to the reporting of inaccurate information to landlords, including false statements that prospective tenants had criminal records.

In determining if a prospective tenant “matched” a person with a criminal record, RealPage’s criteria required an exact match on the applicant’s last name only. During the time alleged in the complaint, RealPage used a “soft” – or non-exact – match for first name, middle name, and date of birth. You’ll want to read the complaint for details, but here are just a few examples:

• If the first three letters of the first name match or if there is a phonetic match, RealPage would report a criminal record match. For example, an Anthony Jones born on 10/15/67 would match to Antony Jones, Antonio Jones, or Antoinette Jones born on the same day.
• If date of birth and last names match, RealPage would report a criminal record match for the first letter of a first name. For example, an Anthony Jones born on 10/15/67 would match to A. Jones born on the same day.
• If there was an exact match on the first name and last name, and the middle name either matched or was blank, RealPage reported a criminal record match when the date of birth was a year apart. For example, an Anthony Jones born on 10/15/67 would match to Anthony Jones born on 10/15/68.

According to the FTC, for the time alleged in the complaint, RealPage had insufficient procedures in place to narrow the results generated by its broad matching criteria, even for consumers with common names. The company applied only limited filters to those broad results and didn’t check for accuracy. The upshot for people trying to rent a house or apartment is that RealPage provided erroneous information to landlords or property managers that applicants had criminal records or, in some instances, were on sex offender registries.

The $3 million civil penalty is the largest ever for an FTC case against a background screening company. The settlement also mandates that RealPage honor the FCRA provision that companies have “reasonable procedures to assure maximum possible accuracy.”

Visit the BCP Business Center for resources on complying with the Fair Credit Reporting Act, including the text of the revised law.