Golden State Today

OAKLAND – California Attorney General Rob Bonta is co-leading a coalition of 15 attorneys general in submitting a comment letter to the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) that proposes much-needed reforms to the tenant screening process. Californians seeking rental housing are facing an increasingly competitive housing market, and their efforts to secure housing are hampered by landlords and tenant screening companies that engage in problematic practices during the tenant screening process, commonly referred to as the tenant background check. In their letter, the attorneys general underscore that they have a strong interest in ensuring that all renters — including minorities and renters with lower income levels, who may be more likely to be harmed by problematic screening practices — have access to safe, quality, and affordable housing.
 

“For too many Californians, securing a good, decent place to rent is challenging,” said Attorney General Bonta. “I’m co-leading a coalition of attorneys general urging action to address one of the barriers to doing so. We are sharing with the FTC and CFPB problems that renters commonly encounter during the background check process and proposed regulatory reforms that would mitigate those issues. Federal action on these issues would complement the work the California Department of Justice’s Housing Justice Team is doing to advance housing access, affordability, and equity in California.”

 

The FTC and CFPB are jointly responsible for enforcing the Fair Credit Reporting Act (FCRA), which imposes requirements on certain aspects of tenant screenings. On February 28, 2023, as part of the Biden Administration’s whole-of-government approach to promoting greater fairness in the rental housing market, the FTC and CFPB published a Request for Information on tenant screenings. This letter responds to that Request for Information.

 

In their letter, the attorneys general underscore that:

• Prospective tenants are often subject to inflated and hidden application fees. The attorneys general recommend, among other things, requiring that application fees be clearly disclosed and commensurate with the actual costs incurred by the landlord.

• Tenant screening reports compiled and sold by tenant screening companies, which are often generated on automated record retrieval with little or no verification, often contain inaccuracies that can lead to rental applicants being denied housing. For example, screening companies may search for only partial name matches, even though doing so does not comply with the FCRA. The attorneys general recommend, among other things, requiring tenant screening companies to provide a free copy of any tenant screening report to a housing applicant when it provides the report to a landlord, to disclose the underlying data used to make a recommendation or screening score, and to investigate and correct allegedly inaccurate or incomplete information in screening reports.
• Landlords and tenant screening companies increasingly rely on problematic screening algorithms that combine various information to generate a single score or result indicating how “safe” it would be to rent to a prospective tenant. These algorithms lack transparency and can be inaccurate, and can have a discriminatory impact on underserved communities. The attorneys general recommend, among other things, requiring that tenant screening companies disclose their reliance on algorithms and screen algorithm models for bias against protected classes and prohibiting the use of certain types of records in screening reports.

In submitting the comment letter, Attorney General Bonta was joined by the attorneys general of Arizona, Colorado, District of Columbia, Hawaii, Illinois, Maryland, Massachusetts, Minnesota, Nevada, New York, Pennsylvania, Rhode Island, Vermont, and Wisconsin.

A copy of the comment letter can be found here. 

Original source can be found here.