What Landlords Need to Know About Using Consumer Reports

Are you in compliance with the Fair Credit Reporting Act (FCRA)? FCRA is designed to protect the privacy of consumer report information and to guarantee that the information supplied by consumer reporting agencies (CRAs) is as accurate as possible. The FCRA requires landlords who deny a lease based on information in the applicant’s consumer report to provide the applicant with an “adverse action notice.”

The Federal Trade Administration (FTC) provides information for landlords covering the FCRA. Here is a summary.

Consumer Report: Contains information about a person’s credit characteristics, character, general reputation, and lifestyle. A report also may include information about someone’s rental history, such as information from previous landlords or from public records like housing court or eviction files.

Consumer Reporting Agency (CRA): A business that assembles such reports for other businesses – credit report, rental history, reference-checking, etc.

Adverse Action: Any action by a landlord that is unfavorable to the interests of a rental applicant.

Adverse Action Notice: Required by FCRA when an adverse action is taken that is based solely or partly on information in a consumer report.

The notice must include:

  • the name, address and telephone number of the CRA that supplied the consumer report, including a toll-free telephone number for CRAs that maintain files nationwide;
  • a statement that the CRA that supplied the report did not make the decision to take
    the adverse action and cannot give the specific reasons for it; and
  • a notice of the individual’s right to dispute the accuracy or completeness of any information the CRA furnished, and the consumer’s right to a free report from the CRA upon request within 60 days.

Non-Compliance: Landlords who fail to provide required disclosure notices face legal consequences. The FCRA allows individuals to sue landlords for damages in federal court. A person who successfully sues is entitled to recover court costs and reasonable legal fees. The law also allows individuals to seek punitive damages for deliberate violations of the FCRA. In addition, the Federal Trade Commission (FTC), other federal agencies and the states may sue landlords for non-compliance and get civil penalties.

Know the law and avoid the fines.

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About Bruce Demarest

Bruce Demarest is a Identity Theft Protection Specialist. He has designed and taught classes to educate individuals and businesses in identity theft risk management. The individuals have learned how to continuously monitor their financial identities from credit fraud, plus how to monitor their personal identifying information for unauthorized use. His business clients have become compliant with the federal & state privacy laws. He has conducted information security audits to identify their potential problems and has designed security policies, programs, and practices to address those problem areas.
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