A Texas company has agreed to pay $3 million to the Federal Trade Commission (FTC) after the commission filed a complaint alleging that the company violated the Fair Credit Reporting Act by failing to ensure the accuracy of the tenant screening information they provided to landlords and property managers. The FTC alleges that from at least January 2012 until September 2017, the tenant screening provider, RealPage, used broad criteria to match applicants to criminal records, which could have negatively affected rental applicants’ ability to gain housing.
If you’re skeptical of the accuracy of your current tenant screening provider, or wish to analyze the quality of potential providers, we recommend that you look for these red flags:
1. Accuracy Ambiguity
While your screening provider’s accuracy measures might not be readily available on their website, we recommend that you ask you provider directly. They should be able to clarify for you how their matching algorithm successfully identifies your applicant (with a social security number, address history, date of birth, etc.) and showcase the initiatives they take to minimize inaccuracies. If they aren’t transparent about their accuracy measures (from their policies to how often they test their accuracy rating), then that is a huge red flag.
2. Your Applicants are Complaining
While it isn’t uncommon for the occasional rental applicant to find something on their tenant screening report that doesn’t belong there, pay attention to the frequency of the complaints. If you notice that many of your rental applicants complain about false information on their criminal report, you’ll want to investigate into your current tenant screening provider. Every tenant screening service (or property management software that provides tenant screening) must handle data inaccuracy complaints from the renter (also known as consumer disputes). Talk to your screening provider about how they handle consumer disputes and what measures they have in place to reduce the number of inaccuracies in the future. If you are having a difficult time finding your provider’s consumer dispute center, or your applicants have voiced difficulty, this can be your red flag.
3. Data Security
Although data security doesn’t directly influence whether your screening provider’s information is accurate or not, it’s important to keep in the back of your mind. Not only should your tenant screening provider have strict security measures in place, but their policies and procedures should be frequently audited and tested. While inaccurate tenant screening reports can sour your reputation and generate quite a few unhappy applicants, a data breach can too, so keep both closely monitored. No matter how accurate their tenant screening reports are, if your provider doesn’t have a high level of data security, their reports simply aren’t worth it and you should consider it another red flag.
Having high quality and accurate tenant screening reports is imperative if you wish to fill your rental property with the most qualified renters. Relying on poor or inaccurate data can completely undermine the purpose of tenant screening, and it can put your reputation at risk.
Other than Accuracy, What Standards do you your Tenant Screening to Have?
Let us know in the comments!