Federal Trade Commission Enters Into Settlement with Tenant Screener for Alleged Violations of the Fair Credit Reporting Act

In February 2010, the Federal Trade Commission (“FTC”) entered into a settlement with First Advantage SafeRent, Inc. (“SafeRent”) stemming from allegations that SafeRent violated the Fair Credit Reporting Act (“FCRA”) by failing to provide renters with proper access to their files. SafeRent compiles reports for landlords on prospective tenants, which include eviction history, lease and payment information, and the results of criminal background checks.

Under FCRA, SafeRent is required to make certain information available to consumers and to enable them to dispute and correct that information in a timely manner. SafeRent, however, refused to accept consumers’ faxed requests for files or to update information. Instead, upon receipt of a faxed request, SafeRent allegedly rejected the faxed requests and directed the consumer to mail in a new request, thus imposing delay into the record process, and potentially preventing consumers from obtaining their desired rental property.

The FTC alleged that SafeRent’s practices violated FCRA and constituted an unfair and deceptive trade practice under the FTC Act. SafeRent settled the dispute with the FTC, agreeing to pay a $100,000 civil penalty. Under the settlement, SafeRent also is required to disclose the contents of a tenant’s file upon the consumer's request and to investigate all reports when the tenant disputes their accuracy.

The FTC’s recent action demonstrates its continued enforcement of consumer protection requirements. Companies subject to FCRA should examine their practices for updating consumer information, and ensure that such practices enable consumers to obtain information and correct misinformation in a timely manner.

To view a printer friendly version of this client alert, click here.

Contact Information

If you have any questions regarding these issues, please contact Jennifer Kashatus at (202) 857-4506 or email, or Pamela Rothenberg at (202) 857-4422 or email, or any of our Privacy or Multifamily Real Estate attorneys.