The 2008 financial crisis fueled tenant screening to become a $1 billion industry, but some are asking at what cost.
The New York Times reported while these companies produce inexpensive reports fast for as many as nine out of 10 landlords nationwide, they are sometimes wrong.
These automated reports are provided to apartment owners without anyone examining the results to check if there are errors, according to court records, the report said.
A New York Times review of hundreds of lawsuits filed against screening companies over the past decade found these fast, often sloppy checks can wrongly label people criminals.
Screening companies have said court documents that they err on the side of including any possible match, rather than excluding possible errors.
Still, the owner of one screening company said his peers can do better.
“We can figure out how to match a record,” Matt Visser, CEO of Victig Screening Solutions, a Utah company sells 10,000 to 20,000 tenant and employment screening reports a month, told the Times.
He said his company double checks any negative findings.
“When we are performing any of these reports, it is a fairly monumental moment in someone’s life,” Visser said. You just have to give a crap.”
Samantha Johnson should know.
She has stopped counting the number of times owners have rejected her application for housing or a job because of incorrect background reports, Johnson told the paper.
Among the crimes listed in her name include burglary and domestic assault in Minnesota; selling drugs and jumping bail in Kentucky; and driving without insurance in Arkansas.
Those are the crimes she allegedly committed and were reported to an Oregon landlord when Johnson applied to be a tenant.
But none of the charges were hers, the Times found.
It appears the automated background check for Johnson included databases even in states where she had never lived and using records for women whose middle names, races and dates of birth didn’t match her own.
“You can totally tell we’re not the same person at all,” Johnson told the Times.
Under federal law, landlords are only required to tell tenants if they were turned down because of a negative report and who produced it.
Steven Schachtman, a Minneapolis landlord, said it’s difficult for property owners to check a report’s accuracy.
“That is why we are hiring them,” he said.
In 2018, the Federal Trade Commission fined RealPage $3 million for using wild-card searches. The Texas company did not have to admit wrongdoing.*
Despite the federal action, RealPage continues to employ a name-matching program that accepts errors, according to federal lawsuits.
(*Editor's note: Due to a typographical error, an earlier version of this article incorrectly stated that RealPage "did" admit wrongdoing, rather than correctly stating that it "did not have to" admit wrongdoing.)