Did you know that some 15 million Americans had their identities compromised in 2016? CNBC reports that identity theft and fraud cost consumers more than $16 billion last year. And crimes like these not only play havoc with the victim’s financial accounts and credit rating, they can impact our emotional well-being and sense of personal safety.
To help fight the rising tide of identity theft, the Federal Trade Commission (FTC) initiated a set of regulations known as the Red Flags Rule in early 2008. If you’re a landlord or property management company, this means you must have procedures in place to investigate and resolve any address discrepancies you find on a rental applicant’s credit report.
Who Must Comply
Part of the FTC’s attempt to detect the warning signs or “red flags” of identity theft includes requiring certain businesses to flag and act on identity mismatches. The Red Flags Rule applies to both financial institutions, and to any organization that’s defined as a “creditor” in the eyes of the FTC. As regular users of consumer reports for the purposes of extending credit, landlords and rental property managers fall into this category.
When you hire a professional background screening company to run a credit check on a potential tenant, any discrepancies between the address provided by your applicant – and that returned by the credit report – will be flagged.
An address that differs substantially doesn’t necessarily mean a rental application should be denied outright, but it is important that you review the mismatch and conduct further investigation. In fact, it’s your responsibility as a landlord to maintain and act on a policy that outlines the steps you’ll take to follow up on applicant address discrepancies.
How to Comply
The point of your policy should be to help you form a reasonable belief that your applicant – and the consumer described on the credit report you’ve just received – are one and the same. To achieve that goal, your response plan may include:
- Reviewing your records to cross-check addresses on the tenant’s rental application and other documents against current and previous addresses listed on the credit report
- Checking for any transcription errors that may have occurred when the credit check was requested
- Confirming that any account information provided by the credit report matches what your applicant provided
- Verifying directly with the applicant that the address information you received from them is accurate
- Asking your applicant for any information that might explain the discrepancy
Don’t be afraid to ask for additional credentials to assist with your investigation. Official documents like drivers’ licences and tax returns may be helpful in supporting the original address information provided by your would-be tenant. You may also want to ask your background check professional to run an SSN Trace that confirms the applicant’s address. If all this fails to resolve the discrepancy, you should pass the results of your inquiry along to the agency responsible for generating the credit report.
It’s wise to seek legal counsel to ensure that the plan you create to deal with address discrepancies meets any necessary rules for compliance. At the very least, the FTC states that your theft prevention policy must be approved by your Board of Directors or a designated senior manager, must form part of your daily operations, and must be updated periodically to reflect evolving threats.