What must be contained in a Notice of Adverse Action?
The landlord must provide the notice if the adverse action in any way is based on a consumer report that was a factor in the landlord’s housing decision. Even if the information in the consumer report was only a minor part in the overall decision, such as cursory review of the applicant’s credit history, the applicant must be notified that an adverse action was taken.
The Notice of Denial Based on Credit Report or Other Information sent to the applicant advises them of rights under the Fair Credit Reporting Act and Fair and Accurate Credit Transactions (FACT) Act of 2003, (15 U.S.C. §§ 1681 and following. The notice must include:
- the name, address and telephone number of the credit reporting agency that supplied the consumer report including a toll-free telephone number for credit reporting agencies that maintain files nationwide,
- a statement that the credit reporting agency that supplied the report did not make the decision to take the adverse action and cannot give the specific reasons for it, and
- a notice of the individual’s right to dispute the accuracy or completeness of any information the credit reporting agency furnished, and the consumer’s right to a free report from that agency upon request within 60 days.
The Dodd-Frank Act amended the FCRA to include additional disclosure requirements when adverse action is taken because of the consumer’s credit score. Specifically, the FCRA requires a person to make the following disclosures in writing or electronically as part of the adverse action notice:
- the consumer’s numerical credit score used by the person in taking adverse action;
- the range of possible credit scores;
- the key factors that adversely affected the credit score;
- the date on which the credit score was created; and
- the name of the person or entity providing the credit score or the information upon which score was created.
If the credit score did not play a role in the decision to take adverse action, these disclosures are not required.
The above discussion covers FCRA requirements as of this writing. Landlords should conduct their own due diligence regarding the use of consumer reports, adverse action notices, and current FCRA requirements. Additionally, there may be state statutes that have different or additional requirements or prohibitions regarding the use of consumer reports for applicant/tenant screenings and notification requirements for adverse action. Landlords are required to comply with all applicable laws regarding consumer report issues.