FTC Settles with Consumer Reporting Agency for FCRA Violations


The agency is fined $3 million for failure to follow procedures guaranteeing accuracy of consumers’ information.

10/19/2018 9:00

The Federal Trade Commission recently announced a $3 million settlement with Texas-based RealPage, Inc., a consumer reporting agency (CRA) that offers tenant background screening services.

According to the complaint in the United States District Court Northern District of Texas – Dallas Division,  the company violated the Fair Credit Reporting Act’s requirement that CRAs follow reasonable procedures to assure maximum possible accuracy, the FTC reports in a blog post from Lesley Fair, senior attorney in the Bureau of Consumer Protection.

Specifically, the allegations focus on the company’s failure to honor that key FCRA provisions caused major problems for consumers unfortunate enough to have names or birthdates similar to people with criminal records.

RealPage furnishes background reports on prospective tenants to landlords and property management companies across the country, according to the FTC. Among other things, the reports typically included applicants’ rental or eviction histories, credit data from the three major CRAs, and information about their criminal records.

“Of course, lots of people have similar names, birthdates, etc. That’s one reason why Section 607(b) of the FCRA requires that ‘whenever a consumer reporting agency prepares a consumer report it shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates,’” Fair writes.

The FTC alleges that RealPage’s automated system used to “match” housing applicants with criminal record data stored in RealPage’s databases or in public records led to the reporting of inaccurate information to landlords, including false statements that prospective tenants had criminal records.

According to the FTC, for the time alleged in the complaint, RealPage had insufficient procedures in place to narrow the results generated by its broad matching criteria, even for consumers with common names. The company applied only limited filters to those broad results and didn’t check for accuracy. The upshot for people trying to rent a house or apartment is that RealPage provided erroneous information to landlords or property managers that applicants had criminal records or, in some instances, were on sex offender registries.

The $3 million civil penalty is the largest ever for an FTC case against a background screening company. The settlement also mandates that RealPage honor the FCRA provision that companies have “reasonable procedures to assure maximum possible accuracy,” according to Fair.

Visit the Bureau of Consumer Protection Business Center for resources on complying with the Fair Credit Reporting Act, including the text of the revised law

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