New CFPB Rule Backs Tougher Screening Restrictions
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On June 28 , 2022 , the Consumer Financial Protection Bureau ( CFPB ) released an interpretive rule affirming the federal Fair Credit Reporting Act ’ s ( FCRA ) limited preemption authority of state laws . In the ruling , the CFPB reminds states of their “ substantial flexibility to pass laws involving consumer reporting ”, laws that could be potentially more stringent than current obligations under the FCRA .
The FCRA is the primary federal legislation regulating the safe , accurate and fair handling of consumer credit information by consumer reporting agencies , users of consumer reports and the subjects of reports . Major provisions applicable to the prospective resident screening process regulate what data can or cannot be considered in a consumer report and how to properly notify an applicant of a denial decision . Housing providers balance the requirements of the FCRA with applicable state and local regulation to determine compliant screening practices and procedures .
The CFPB ’ s interpretive rule suggests that state lawmaking bodies can and should promote legislation that would bolster
www . aamdhq . org restrictions on screening practices . For example , the interpretive rule proposes that state law could “ forbid consumer reporting agencies from including information about medical debt , evictions , arrest records , or rental arrears in a consumer report ” without triggering the preemption authority of the FCRA .
State legislatures have considered several bills this year related to tenant screening , as well as legislation governing the availability of certain data when screening housing applicants . In Utah , a measure passed where certain evictions – those at least three years old and have judgement satisfied – would be automatically expunged from an individual ’ s record . In Louisiana , legislators failed to adopt a bill that would place restrictions on the evaluation of an applicant ’ s criminal history .
Prospective resident screening remains an important and necessary function of the leasing process . Efforts by states to undermine or restrict screening processes can risk resident safety , adversely impact the financial viability of a property and create severe implications for the broader housing market .
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