RentGuard's 'Informational Tool' and the FCRA Label Problem
RentGuard sells a 'Tenant Reliability Score' to small landlords for $12 per report. The score blends eviction-court filings, utility payment history bought from a data broker, social-media sentiment analysis, and a landlord's own notes. RentGuard's contract says the score is 'an informational tool, not a consumer report,' and RentGuard maintains no dispute process, does not verify identity, and sends no adverse-action notices - it tells landlords only that 'declines are the landlord's decision.' A landlord in Ohio declines an applicant whose file contains a 2016 eviction that was later sealed, and declines a second applicant because the sentiment model flagged a 2019 tweet. RentGuard has 4,000 landlord customers and 900,000 consumer files.
1. Is the Tenant Reliability Score a consumer report, and is RentGuard a consumer reporting agency? Address the contractual disclaimer.
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Both definitions are substance-based, not label-based. Under FCRA §603(f), a consumer reporting agency is anyone that, for fees, dues, or cooperative nonprofit basis, regularly assembles or evaluates consumer information for the purpose of furnishing consumer reports to third parties. RentGuard does exactly that at scale - 900,000 files, 4,000 paying customers.
Section 603(d) defines a consumer report as any communication bearing on a consumer's credit worthiness, character, reputation, personal characteristics, or mode of living, used or expected to be used for credit, employment, insurance, or any other purpose in the catch-all. Tenant screening has long been treated as consumer reporting by the FTC and CFPB; the score is used to determine eligibility for housing, which is squarely inside the definition. Drafting 'not a consumer report' into the contract is ineffective - regulators and courts look at function, and a disclaimer cannot contract away statutory duties owed to consumers who never signed it.
Once classified, RentGuard's design choices (no disputes, no identity verification, no accuracy program) are not neutral product decisions; they are systematic violations.
2. Which FCRA duties has RentGuard breached, and what does the Ohio landlord owe the two declined applicants?
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RentGuard (as CRA): §607(b) requires maximum possible accuracy - the sealed 2016 eviction and an unverified sentiment flag fail that standard, and a sealed record should not be reported at all. §605(a) imposes obsolescence limits (generally seven years for adverse items other than convictions). §609/§611 require consumer disclosures and reinvestigation of disputes within 30 days (45 if the consumer supplies additional information during the period). §604(b) requires certifications from users. The absence of any dispute mechanism is the most legally exposed gap.
Landlord (as user): §604 requires a permissible purpose - a rental application initiated by the consumer supplies one, but the landlord must certify that use. On each decline, §615(a) requires an adverse-action notice identifying the CRA, stating the CRA did not make the decision, and giving the consumer 60 days to request a free file disclosure and dispute.
Exposure: negligent noncompliance (§617) yields actual damages plus fees; willful noncompliance (§616) adds statutory damages of $100–$1,000 per consumer, punitive damages, and fees - with 900,000 files, a class action is the dominant risk.