A new effort to examine and potentially regulate how housing rentals work in the United States is underway. First, the Biden administration rolled out a proposed framework for a "Renter's Bill of Rights" to establish broad new protections for those seeking housing. Now, as the voice of advocates for tenant rights grows louder, two government agencies want to hear more from the public about using real estate background check procedures.
The Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) jointly announced a public comment period focused on tenant background checks. The FTC-CFPB comment period invites everyone with rental experience to submit their stories and comments on how such checks have impacted their ability to secure housing. Landlords, property management companies, and others are also invited to have their voices heard so the working group can gather information from both sides.
The groups seek information on specific problems, such as whether inaccurate background checks are a serious and artificial barrier to housing. The ultimate goal is to formulate rules and regulations to fight against housing discrimination, such as blanket denials for anyone with a criminal record. Such restrictions, often carried out through subterfuge so landlords can deny they have discriminated, can fuel recidivism and worsen situations.
Some early comments have raised important issues surrounding evictions and highly restrictive real estate agent background check requirements. Others have questioned the need for landlords to use hard credit checks, which can damage an individual's credit score.
Fees will also likely be in the sights of these regulating agencies. Nationwide, many landlords and property managers have begun charging large application fees supposedly to cover the costs of background checks. The FTC and CFPB want to understand whether such actions create a discriminatory pattern of denying lower-income individuals access to housing. Some applicants, for example, complain of the need to pay multiple $50 application fees without a guarantee of even being considered for tenancy.
The public comment period aims to accumulate as many perspectives as possible. These comments could then form the basis of future regulations—such as clamping down on application fees or turning a stricter eye towards correcting and preventing inaccuracies (such as old data) in consumer reports used for screening. The government also wants to hear about AI and automated screening tools.
Ultimately, the result could be additional restrictions on how landlords use the criminal background check and credit check as part of their screening process. Since this is federal action, any future changes could potentially affect all landlords nationwide. Therefore, it is important to follow this action closely—though it could be years before any new regulations manifest if any.
The public comment period runs until the end of May 2023, and those with a personal interest or stake should consider submitting their perspective. As landlords wish to select tenants that are most likely a good fit for the property, many others simply want to find an affordable place to live. Whether this comment period could be the forerunner to major action remains to be seen.
About Michael Klazema The author
Michael Klazema is the lead author and editor for Dallas-based backgroundchecks.com with a focus on human resource and employment screening developments