CFPB Advisory Opinion Marks New Beginning for Background Screening

Big changes are on the horizon for the background screening industry, which include big implications for the rental housing community.

Last month, the Consumer Financial Protection Bureau released an advisory opinion that underscores certain obligations specifically around maximum accuracy, related to background screening reports. That includes addressing the treatment of sealed/expunged and other records. The advisory opinion represents the CFPB’s guidance on how it interprets the FCRA and is a leading indication of how the law will be applied in matters of enforcement and supervision.

Here is how the CFPB described their Advisory Opinion:

“First, an advisory opinion on background check reports highlights that those reports must be complete, accurate, and free of information that is duplicative, outdated, expunged, sealed, or otherwise legally restricted from public access. Second, an advisory opinion on file disclosure highlights that people are entitled to receive all information contained in their consumer file at the time they request it, along with the source or sources of the information contained within, including both the original and any intermediary or vendor source.”

TransUnion applauds the CFPB for the additional guidance and is pleased to see them taking proactive steps to apply the FCRA uniformly across the industry. Our company has been at the forefront of some significant changes to what data is delivered in background screening reports to the rental housing industry and continue to believe that consumers are best served when regulatory standards and rules are uniformly enforced.

Comprehensive background screens are an imperative for property owners of all sizes who depend on this tool to provide safe, comfortable living environments while receiving consistent rent payments to meet their own ownership and operating obligations. Appropriate tenant screening with accurate information can help secure their asset and help promote the availability of much-needed units for renters.

In the absence of that, many would have to take alternative steps to protect their business and their investment, like requiring higher security deposits, raising rents, or taking the unit off the market altogether. The best outcome for consumers is an environment where property owners can offer competitive pricing with confidence.

It is encouraging to see the Bureau take steps to improve background screening while continuing to allow for the sharing of accurate and predictive information.

As TransUnion continues to analyze the Bureau’s notice, we look forward to working with regulators to homogenize industry standards and bring clarity to the regulatory environment.