RentGrow Agrees to $2.25M Civil Penalty Over Tenant Screening Practices

Case Snapshot

• Defendant: RentGrow Inc.
• Court: U.S. District Court for the District of Columbia
• Agencies: U.S. Department of Justice and Federal Trade Commission
• Laws: Fair Credit Reporting Act and FTC Act
• Key Issues: Tenant screening report accuracy, consumer disclosures, dispute procedures, and representations about corrections
• Resolution: $2.25 million civil penalty judgment and injunctive relief, including compliance reporting, monitoring, and recordkeeping requirements

Consumer reporting company RentGrow Inc. has agreed to a $2.25 million civil penalty and injunctive relief to resolve federal allegations that its tenant screening practices violated the Fair Credit Reporting Act (FCRA) and the Federal Trade Commission Act (FTC Act).

A federal court entered a stipulated order resolving the case, which was investigated and referred to the U.S. Department of Justice (DOJ) by the Federal Trade Commission (FTC).

RentGrow provides background reports used by landlords and property managers to screen prospective tenants for rental housing.

Government Alleges Problems With Report Accuracy

In its complaint, the government alleged that RentGrow failed to maintain reasonable procedures designed to ensure the maximum possible accuracy of information included in its tenant screening reports.

Accuracy can be particularly important in the tenant screening process because landlords and property managers may use consumer reports when deciding whether to approve a rental housing application.

Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division emphasized the impact these reports can have on housing applicants.

“Tenant screening reports can significantly affect the outcome of a housing application,” Shumate said.

He added that consumers should be able to expect accurate and transparent reporting and have a meaningful opportunity to address information that could affect them.

Allegations Involve Consumer Disclosures

The government’s FCRA allegations extended beyond the accuracy of RentGrow’s reports.

According to the complaint, RentGrow allegedly failed to provide consumers, upon request, with information contained in their consumer reports and the sources of that information.

The FCRA establishes requirements for consumer reporting agencies regarding the information they maintain and disclose to consumers. The government’s complaint alleged that RentGrow’s practices did not satisfy those requirements.

Dispute Procedures Also Challenged

Federal officials also alleged that RentGrow failed to follow required procedures when consumers disputed the accuracy of information appearing in their reports.

The dispute process provides consumers with an opportunity to challenge information they believe is inaccurate. According to the government, RentGrow’s handling of certain disputes failed to comply with the FCRA’s procedural requirements.

The allegations therefore covered several stages of the consumer reporting process, including the preparation of tenant screening reports, consumer access to report information, and the handling of accuracy disputes.

FTC Act Allegations Focus on Corrected Information

The complaint separately alleged that RentGrow engaged in deceptive practices in violation of the FTC Act.

According to the government, RentGrow represented to tenant applicants that when they successfully disputed information in a report, corrections or removals of inaccurate information were reported to landlords and property managers.

Federal officials alleged that those representations were misleading.

The FTC Act prohibits unfair or deceptive acts or practices in or affecting commerce, providing a separate basis for the government’s claims concerning RentGrow’s communications with consumers.

Compliance Takeaways

The RentGrow resolution highlights federal scrutiny of the information consumer reporting companies provide for rental housing decisions.

For companies involved in tenant screening and other consumer reporting activities, the allegations underscore the importance of maintaining procedures designed to promote report accuracy, providing consumers with required disclosures, and following applicable procedures when information is disputed.

The case also illustrates the importance of accurately communicating what happens after a successful dispute, particularly when corrected information could influence decisions made by landlords or other report users.