CFPB Takes Aim at Misleading, Incomplete, and Old Information in Background Check Reports

January 11, 2024 — Press Release

New guidance addresses inaccurate background check reports and sloppy practices in providing workers and renters with copies of their reports

WASHINGTON – Today, the Consumer Financial Protection Bureau (CFPB) issued two important Advisory Opinions to protect renters and workers from inaccurate background check reports and strengthen their rights to obtain reports under the Fair Credit Reporting Act (FCRA). Most employers and landlords use background check reports to screen workers and renters. These reports include criminal records and, in the case of tenant screening reports, eviction records.

“The CFPB continues its vital work protecting renters and workers under the FCRA by providing a desperately needed clarification of the rules of the road for tenant screening and employment background reports. Kudos to the CFPB for helping renters, who continue to face an ongoing affordable rental housing crisis, and workers who often face huge barriers to getting jobs due to criminal records,” said Ariel Nelson, staff attorney at the National Consumer Law Center, who leads its Criminal Justice Debt and Reintegration Project.

The first CFPB advisory opinion addresses the serious accuracy problems with background check reports by:

• prohibiting criminal or eviction records from being included in a background check report if they have been expunged, sealed, or otherwise legally restricted from public access;
• requiring that reports include available disposition information (for example, if the report includes the filing of a criminal charge or eviction, it must include the fact that the filing was subsequently dismissed);
• requiring, when background reports contain multiple entries for the same criminal or eviction case, the background screener to make clear that the entries relate to the same case. Otherwise, a person can appear to have multiple records when in reality the report is just causing different stages of the same prosecution – arrest, charge, conviction, and release from confinement, for example – to appear as three or four different cases or proceedings; and
• starting the seven-year clock for reporting eviction and non-conviction criminal records from the initial event rather than the disposition date (for example, reporting an arrest for up to seven years from the date of arrest, not the date of dismissal).

“The CFPB has made it clear: background check agencies should not be including expunged or sealed criminal or eviction records in tenant screening or employment reports. Yet too often, we have seen these records show up. This undermines the critical ‘second chance’ that states have decided to give their residents and deprives consumers of their chance for housing and jobs, possibly causing homelessness or extended unemployment,” said Chi Chi Wu, senior attorney at NCLC, who leads its work on credit and consumer reporting issues.

The second CFPB advisory opinion addresses the requirement that credit bureaus, background check agencies, and other “consumer reporting agencies” provide consumer file disclosures under the FCRA. These are commonly referred to as credit reports, background check reports, or tenant screening reports. The opinion makes clear that:

• consumers who request a copy of their own report need not use magic words such as “request,” “file,” or “complete file” to receive the disclosures of everything in their file, which is what they are entitled to under the FCRA;
• if a user (such as a landlord) only receives a summary of information, such as a credit or tenant screening score or recommendation, the background check agency still must disclose everything in the consumer’s file, including information that formed the basis of the summary or score; and
• the FCRA requires background check agencies to disclose the sources of the information in a consumer’s file. The advisory opinion makes clear this includes both the original source of a public record (such as the court) and any intermediary or vendor that provided the item of information from the original source. Requiring disclosure of vendors is critical when a consumer is trying to correct errors because information is often sold by vendors to numerous tenant-screening or other background check companies.

Related Resources

• FTC and CFPB Take Action Against Faulty Tenant Screening Reports, Oct. 12, 2023
• Digital Denials: How Abuse, Bias, and Lack of Transparency in Tenant Screening Harm Renters, Sept. 26, 2023
• Zombie Records: How Sealed or Expunged Court Records in Tenant & Employment Screening Reports May Illegally Cost People Jobs & Housing, June 29, 2022
• The High Cost of a Fresh Start: A State-by-State Analysis of Court Debt as a Bar to Record Clearing, Feb. 1, 2022
• Broken Records Redux: How Errors by Criminal Background Check Companies Continue to Harm Consumers Seeking Jobs and Housing, Dec. 2019