Most landlords understand the importance of complying with Fair Housing laws. Far fewer understand that they also have legal obligations under the Fair Credit Reporting Act (FCRA) when using tenant screening reports.
Failure to comply can expose a landlord to government investigations, civil liability, and costly legal disputes.
Recently, several federal agencies—including the Department of Housing and Urban Development (HUD), the Federal Housing Finance Agency (FHFA), and the United States Department of Agriculture (USDA)—issued reminders regarding landlords' responsibilities when using consumer reports such as credit reports and tenant background checks.
When three separate federal agencies are all discussing the same issue, landlords would be wise to pay attention.
Understanding Adverse Action Notices
Under the Fair Credit Reporting Act, landlords who take an "adverse action" based in whole or in part on information contained in a consumer report have specific notification requirements.
An adverse action may occur when:
- You deny a rental application
- You require a higher security deposit
- You increase the rent amount
- You require a co-signer or guarantor
- You impose other conditions that would not have applied absent information found in the report
When an adverse action is taken, the applicant must generally be informed of the decision and provided information about the consumer reporting agency that supplied the report.
Providing this information in writing is the best way to demonstrate compliance and protect yourself if questions arise later.
Increased Attention on Housing Practices
Landlords should also be aware that fair housing enforcement efforts continue to expand.
Government agencies and private advocacy organizations regularly conduct testing programs, educational campaigns, and investigations aimed at identifying potential violations of housing laws.
In Florida alone, substantial funding has been provided to organizations involved in fair housing education, complaint assistance, and testing activities.
Whether you own one rental unit or one hundred, it is important to operate your business as though every applicant interaction may someday be reviewed by an investigator, regulator, judge, or jury.
Use a Written Telephone Script
One of the simplest ways to reduce risk is to use a written telephone script.
Every prospective tenant should receive essentially the same information delivered in the same manner.
Why?
Because one of the most common causes of fair housing complaints is inconsistency. When different applicants receive different answers, different explanations, or different screening standards, it can create the appearance of discrimination—even when none was intended.
A written script helps ensure consistency and professionalism.
