RealPage will pay $3 million in a settlement with the Federal Trade Commission, which accused the real estate tech and data company of providing landlords and property managers with faulty tenant screening results over a five-year period.
The FTC alleged that RealPage violated the Fair Credit Reporting Act by “failing to take reasonable steps” to ensure the accuracy of its tenant screening reports from January 2012 through September 2017.
According to the FTC, RealPage’s screening reports could have shown incorrect criminal records for a prospective tenant because of the company’s limited filtering system on its screenings.
The FTC claims that RealPage’s screening reports were generated using an automated system used the applicant’s first name, middle name when available, last name, and date of birth when searching for criminal records.
But, the FTC alleges, the system only required an exact match of an applicant’s last name coupled with a non-exact match of a first name, middle name, or date of birth.
So, as the FTC explains, if RealPage ran a screening on someone named Anthony Jones who was born on Oct. 15, 1967, its system could find a criminal record for people with names like Antony Jones, Antonio Jones, or Antoinette Jones, all with the same date of birth, and say Anthony Jones had a criminal record.
And because RealPage’s screening reports incorrectly associated some potential renters with criminal records, a landlord or property manager could have denied those renters housing.
RealPage denies the allegations, but said it chose to settle with the FTC to avoid the cost and “distraction” of fighting the charges.
RealPage also claims that the FTC investigation centered on a “minuscule fraction” of the company’s screening report results.
“The FTC’s investigation centered on certain ‘soft’ matching practices for consumers with common last names,” RealPage said in a statement, adding that “soft matching” is an issue for the entire screening industry.
“The FTC was unable to identify any prior industry or regulatory guidance or other clear legal precedent that RealPage should have followed,” the company said.
“We were disappointed that the FTC singled out RealPage for an issue that has confronted the entire screening industry, namely how to match applicants with common last names to public records when most courts do not make social security or driver’s license numbers available as part of those records,” RealPage continued. “While we disagree with the FTC’s assertions, we agreed to settle this matter in order to avoid the expense and distraction of litigation.”
According to RealPage, all of the issues alleged by the FTC took place before RealPage changed its matching technology in September 2017.
RealPage also noted that there were no findings of fact in the case, and said that the company does not admit to any wrongdoing.
Nevertheless, the company is choosing to settle.
According to the FTC, the settlement amount of $3 million is the largest civil penalty the FTC has obtained against a background screening company.
In addition to the financial penalty, the settlement also requires RealPage to maintain “reasonable procedures to assure the maximum possible accuracy of the information it includes about individuals in its consumer reports. RealPage is also subject to compliance and reporting requirements.
“You shouldn’t get turned down for an apartment because someone has the wrong information about you,” Andrew Smith, director of the FTC’s Bureau of Consumer Protection, said. “This case shows that, especially with today’s tight rental market, we will hold tenant screening companies responsible for the accuracy of their reports.”