Blog June 26, 2019

The implications of tenant screening false positives

By Aaron Durkee

While your multifamily property might already use a tenant screening service, what should be done if that service produces a false positive? These might seem like minor problems on the surface, but tenant screening false positives actually have several serious implications.

If your screening service produces a false positive, then…

  • Your property could be turning away a good applicant
  • You could lose money
  • It may create a compliance issue for your property

What is a tenant screening false positive?

A false positive happens when your tenant screening service incorrectly matches an applicant to a record, and their application is subsequently denied. When a false positive is produced, there is a good chance that by denying the applicant, you’ll be turning away a prospect who could have been a great resident.

More importantly, however, a false positive in resident screening could mean that your property is failing to comply with the Fair Housing Act. A recent court ruling found that fair housing laws are applicable to screening services, and in some cases, the screening service provider did not go far enough in preventing the disparity impact on housing.

Even though the screening service provider was found to be in the wrong in the aforementioned court ruling, another recent lawsuit has proven that screening providers and other entities can be fined and/or sued for failing to comply with these laws as well.

How can you prevent false positives and avoid these issues?

One of the preliminary ways to avoid false positives and compliance issues is to ensure that the criteria set by your property management is within the bounds of applicable laws. Your tenant screening service will provide the matching logic to align with the factors you’ve chosen. As laws change, however, these services will need to be monitored and kept up to date. As recent history has shown, there are laws and offenses that are being decriminalized as time goes on, and the screening logic must be adapted to fit those changes.

It’s important to have a comprehensive understanding of the current guidelines of your tenant screening service. Knowing the “ins” and “outs” of your service and how it lines up with all applicable fair housing laws can protect your residential property from legal trouble and give you confidence that your service is accurate when you do deny an applicant.

If these guidelines are out of date, then it’s the responsibility of the multifamily property manager to implement new ones. The process of setting new guidelines might take time, but it’s important that you set detailed rules that are aligned with the latest local laws and standards. Establishing broad, blanket rules for your tenant screening process, such as denying all applicants with a criminal history, goes against HUD guidelines designed to avoid disparity impact of protected classes.

How resident screening providers can help

Screening providers also have a responsibility to equip property managers with the accurate and extensive services they need to avoid false positives and set up a screening process that works best for their property. For example, MRI Software publishes a compliance review for our clients so they can manage the factors that contribute to their screening processes and get a clearer view of things that might need to be adjusted.

As a screening provider, our team has a comprehensive knowledge of the law and knows which things aren’t supposed to be considered when establishing screening guidelines, including rules that are only applicable in certain states. Learn more about resident screening and why implementing the right tools and processes is vital to your multifamily property.

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