Landlords often use a consumer report to screen new tenant applicants. The Federal Fair Credit Reporting Act (FCRA) mandates that a landlord who uses a consumer report make certain disclosures when the landlord takes an action adverse to a new tenant.
Consumer report. A consumer report contains information about a person’s credit characteristics, character, general reputation, and lifestyle. Examples include credit reports and reports from tenant-screening or reference-checking services.
The FCRA applies even if the landlord relies on the consumer report only as one reason for an adverse action. The information in the consumer report does not have to be the only or even the primary basis for the adverse action.
The FCRA applies if the landlord uses a vendor to obtain a consumer report. The FCRA does not apply if the landlord or the landlord’s employees verify information.
Adverse action. An adverse action is any action by a landlord that is unfavorable to the interests of a rental applicant. Examples include denying the rental application, requiring a co-signor, requiring a larger deposit than for other rental applicants, or asking for higher rent than for other applicants.
Adverse action notice. If a landlord takes an adverse action based solely or only partially on a consumer report, the landlord must give notice to the tenant-applicant. The notice is required even if the consumer report is not the main reason for the adverse action. 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.
A landlord who fails to comply with the FCRA may face a lawsuit for damages, including court costs and reasonable legal fees. A court may award punitive damages for deliberate violations. The FCRA protects landlords who only inadvertently fail to provide the adverse action notice, so long as the landlord can show that he maintained reasonable procedures to assure compliance.
At least one appellate court has ruled that private parties may not sue under the FCRA, and that only Federal governmental agencies can enforce the FCRA.[1]
This short summary is not a substitute for legal advice. Contact an attorney for advice about your circumstances.
[1] Perry v. First Nat. Bank, 459 F.3d 816 (7th Cir. 2006).
