New York City Loses Battle Against Tenant Blacklisting Companies
- September 10, 2015
- Joel Winston, Esq.
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There are hundreds of sophisticated data companies collecting and selling consumer rental history information to landlords. The New York State Bar Association estimates that there are approximately 650 of these tenant blacklisting companies in the United States selling renters credit reports to landlords.
For example, Experian RentBureau, which claims the title as “the largest and most widely used credit reporting agency in the multifamily [apartment rental] industry” has about 10 million residents in its database and receives updated rental payment history data from landlords every 24 hours.
The City that Never Sleeps has to Sleep Somewhere
Lawmakers and consumers are overwhelmed by the sophistication and proliferation of tenant blacklisting companies (also known as tenant screening bureaus). New York City presents a case study of this challenge.
In 2010, the City Council “began to hear from constituents throughout the city that they were getting rejected for apartments and they couldn’t figure out why,” says Christine C. Quinn, the New York City Council speaker. “They had an albatross around their necks, and they didn’t even know it.”
In response, the City Council passed legislation, called the Tenant Fair Chance Act, that requires landlords, property managers and brokers to disclose which tenant screening company (or tenant blacklisting company), if any, they plan to use for these background checks.
Then two new problems emerged. The first problem was manpower; the NYC Department of Consumers Affairs (DCA) was given sole responsibility to police landlords and check for the required disclosures to renters. The NYC DCA has a team of undercover investigators checking landlords for compliance, but it would take them decades to visit every landlord, management company, and rental agent in New York City.
The NYC DCA now encourages consumers who notice that a rental agent does not have the required sign posted to file a complaint with DCA at nyc.gov/consumers or by calling 311. New Yorkers can also tweet a tip to @NYCDCA (link to: http://www.twitter.com/nycdca) or post to DCA’s Facebook (link to:http://www.facebook.com/nycdca).
The second problem was that the New York State Courts were still selling an electronic feed of Housing Court cases to private tenant screening bureaus. These bureaus were using the data feed to assemble “tenant blacklists” and sell them to landlords. In fact, New York’s court system only charges tenant screening companies a $20,000 initial fee and $350 per week thereafter for a daily data feed of housing court cases.
After an outcry from lawmakers and tenant’s rights groups, the New York State Court system voluntarily agreed to remove tenant’s names and addresses from the data feed. Local politicians applauded the change in 2012. “Landlords have routinely blacklisted tenants based on nothing more than the fact that they may have appeared in Housing Court. Our courts, as public institutions, should not facilitate this unjust practice.” said New York Assemblymember Brian Kavanagh.
Unsuccessful Attempts at Protecting NYC Consumers from Tenant Blacklisting
But the victory was short-lived because the tenant blacklisting companies are now exploiting a loophole to get the data. Under New York state law, the Housing Court records are public, so the tenant screening bureaus hire data entry clerks to manually record the data. These data entry clerks sit in the Housing Court office in Lower Manhattan for 40 hours per week manually plugging in the docket numbers and transposing the tenant’s name and address into the tenant screening bureau’s private database.
New York State Senator Liz Kruger, one of the elected officials who worked on the 2012 deal with the NY State Court System to limit tenant data, expressed her disappointment, “It is frustrating. We thought we had stopped these tenant blacklists, but the companies have found a way around it, and now it looks like we are back where we started.”