WASHINGTON, D.C. — RentGrow has agreed to pay $2.25 million and change how it prepares tenant screening reports to resolve allegations that it violated federal consumer reporting law, a case that underscores increased regulatory scrutiny of background screening companies whose reports can determine whether consumers secure housing.
The proposed settlement, filed by the U.S. Department of Justice on behalf of the Federal Trade Commission in the U.S. District Court for the District of Columbia, alleges the Massachusetts-based company violated the Fair Credit Reporting Act by failing to maintain reasonable procedures to ensure the accuracy of tenant screening reports it sold to landlords and property managers. The company also allegedly violated the FTC Act by misleading consumers about the outcomes of certain report disputes.
According to the complaint, RentGrow’s reports sometimes included duplicate criminal or eviction records, making it appear that prospective tenants had more criminal convictions or eviction actions than they actually did.
Federal regulators allege the duplication stemmed not only from underlying data but also from the way RentGrow displayed information, causing some proceedings to appear multiple times. The complaint further alleges the company was aware of the issue but did not implement reasonable corrective procedures until after the FTC opened its investigation.
The FTC also alleged RentGrow failed to fully disclose the information sources used to compile consumer reports when requested, making it more difficult for consumers to identify and challenge inaccurate information.
According to the complaint, the company did not disclose that it used LexisNexis Accurint to obtain certain historical address information and middle names that were then used to match criminal and eviction records to consumers.
Regulators also contend RentGrow failed to comply with statutory requirements governing consumer disputes. The complaint alleges the company labeled some disputes as “invalid” without conducting the required reinvestigation, including disputes involving duplicate records or changes to court records that occurred after a tenant screening report had been issued.
The FTC further alleges RentGrow misled some consumers after they successfully disputed information in their reports. According to the complaint, consumers were told landlords or property managers had been notified of corrected reports, while property owners instead were allegedly informed that no changes had occurred.
“Inaccurate background reports can have a real impact on people by affecting their ability to obtain housing or a job,” Christopher Mufarrige, director of the FTC’s Bureau of Consumer Protection, said. “Companies that provide background reports have a responsibility under the law to take reasonable steps to ensure the accuracy of those reports and to comply with other requirements of the FCRA.”
Under the proposed order, RentGrow would pay a $2.25 million civil penalty and be barred from failing to maintain reasonable procedures designed to maximize the accuracy of consumer reports, including procedures intended to prevent duplicate criminal and eviction records.
The proposed order also would require the company to comply with other Fair Credit Reporting Act obligations and prohibit it from misrepresenting that updated tenant screening reports have been provided to landlords or property managers after consumers successfully dispute inaccurate information.
The FTC voted 2-0 to authorize referring the matter to the Justice Department and approving the proposed settlement. The stipulated order will take effect if approved by a federal district court judge.
More information is available from the FTC at: https://www.ftc.gov
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