Let’s say you are anxiously awaiting word from your new landlord about a move-in date. You secure the deposit from the old apartment, arrange for a moving company, put down your new deposit, and change your mailing address. Moving is stressful even when it goes smoothly, but you think you’ve done everything right.
Imagine your shock when you get a call from the new management company asking why you didn’t reveal your criminal conviction for forged checks and informing you that they are denying your application because of it. You’re surprised because you’ve never been convicted of anything. What’s happening here?
It is common practice for employers and landlords to check credit reports; about 94% of employers and 90% of landlords contract with screening companies to provide this data. Those background checks result in over 50 million reports a year, and that only covers the three largest background screening companies—First Advantage, Sterling, and Hire Right. The industry generates over $1 billion for these three companies plus another 2,000 smaller screening companies.
With this kind of volume, the process has to be highly automated to work. There is little human review of all that data, so the reports are often incorrect. This sometimes results in errors such as criminal convictions that never occurred. Just ask Samantha Johnson of St. Helens, Oregon. The background check done by her prospective landlord uncovered burglary and domestic assault in Minnesota, selling drugs and jumping bail in Kentucky, driving without insurance in Arkansas, and more. Her application was denied, but the report turned out to be a compilation of five other Samantha Johnsons, some living in states where the applicant Samantha Johnson had never lived. One Johnson was actually incarcerated at the time the apartment application was completed.
No human being ever saw any of that information to assess it for accuracy, much less logic. Samantha Johnson is used to this now, and she knows what to do. She has been denied housing and work numerous times due to the lax oversight of data coming from screening companies. There is a process, and she taps into it right away: find out where the report came from, call the screening company, fax in a copy of her ID, and start the dispute process. She wishes the problem could be prevented, though, rather than triaged after the fact.
“I’ve tried to figure out if there’s something I can do to stop that from happening,” she said, but she also acknowledges that it’s hard due to the sheer number of screening companies involved. And many times, the person denied housing or a job isn’t told the reason for the rejection at all, so they don’t know to question it.
In the case of housing, the Fair Credit Reporting Act does require landlords to tell tenants if they were turned down because of a negative report. They also must disclose who produced the negative report. But screening companies have 30 days to respond to a tenant’s request for corrections, and there aren’t many apartments that are still available after 30 days. Rules for employment are a bit tighter, as they require employers to share the negative report itself with a rejected applicant.
Those on both sides of the process admit that screening companies could remedy much of this by using some simple methods to reduce incorrect reports. Samantha Johnson had never lived in Minnesota, Arkansas, or Kentucky, much less spent any time in prison. Simply using her full name or date of birth eliminates all six other Samanthas that show up on her erroneous report. But screening companies aren’t doing that to any significant degree. Samantha has had to sue six times since 2016 for incorrect reports; all cases were settled.
The business of screening is huge, resulting in billions of dollars for companies in that industry. An employer or landlord has an obligation to know who they are hiring or renting to, but the fact that hundreds of federal lawsuits have been filed against screening companies over the past 10 years points out the cracks in the system. And for the people caught in the system, sometimes a lawsuit is the only way to pursue justice.