Tenant-screening services, begun on the West Coast and now spreading across the country, have been firmly entrenched in the Washington area for several years.
RentCheck, a division of the national TeleCheck corporation, with local offices in Chevy Chase for seven years, and Tenantcheck, a locally based firm that has operated in Rockville for four years, both screen prospective tenants' financial well-being for hundreds of landlords here.
But the tenant search outfits are also trying to find any information that will tell them whether a would-be tenant will pay the rent on time and not leave the apartment in shambles.
"We're looking for truths," said Brannon Anderson, president and owner of Tenantcheck. "Thirty percent of people don't tell the truth on their tenancy applications. We investigate your entire history as an individual. Anything a matter of public record is not off limit to me. We access five credit bureaus across the nation. We run credit checks on individuals from Alaska to Florida."
But how his agency does its investigations is a "trade secret," he said.
RentCheck is less reticent about its operation. It does a computer search of its data base, according to Stanley A. Rosenthal, RentCheck's eastern regional manager. Because it is a subsidiary of TeleCheck, a national bad-check reporting service, RentCheck subscribers actually get two reports on clients, one outlining the tenant's rental history and one concerning the tenant's bad-check history, if any.
RentCheck said it rejects only 2 to 5 percent of all prospective tenants it scrutinizes. "We find most people are honest, bill-paying people," said Larry O'Neil, RentCheck's national manager.
Rosenthal said his firm, the country's largest tenant-checking service, represents landlords controlling 2.5 million rental units -- about 10 percent of the national supply-and receives 200,000 to 250,000 inquiries annually.
"The Washington area is one of our most active, with 250,000 units," Rosenthal said. Tenantcheck represents landlords for between 300,000 and 400,000 units here.
The agencies charge from $5 to $40 for a report. Tenantcheck can respond to landlords in anywhere from four hours to three days, with the prices set accordingly. RentCheck, which performs a more comprehensive reference check, can take up to 40 days.
"We maintain a record of bad debts incurred by prospective tenants . We don't accept any qualitative reporting, any life-style information," Rosenthal said. Yet a prospective tenant of a unit owned or maintained by a RentCheck subscriber is required to fill out an application that authorizes TeleCheck or RentCheck to obtain information about the applicant's "character, general reputation, personal characteristics and mode of living."
One would-be tenant in Washington was so angry about the erroneous information RentCheck reported about her that she sued the firm in D.C. Superior Court. RentCheck agreed to pay the woman, Doris Gales, $1,000 in a settlement of the suit.
Gales was a "victim" of the woman she was renting her apartment from, according to Rosenthal and Hugh Jewett, TeleCheck's counsel in the firm's Denver headquarters. According to the court record in the case, Gales paid her rent to the woman she was subleasing the apartment from, but that woman did not pay the landlord. The latter in turn began eviction proceedings against Gales and the other woman. RentCheck "inadvertently" reported that a lawsuit had been filed against Gales, Rosenthal said.
"It was an error on our part," he said. "We corrected it immediately by notifying her and the building owner . It's the only suit that we've had to settle in the Washington area , as far as I know." Anderson's Tenantcheck said his firm has faced no lawsuits here.
Rosenthal thinks RentCheck's system is fair, "because we've cleared information out of the computer as soon as the prospective tenant's debt is made good." Tenantcheck, on the other hand, doesn't computerize its data "because we don't want to carry erroneous information we must verify each time," Anderson said. Tenantcheck stores its facts on paper for 90 days to six months, giving a person time to respond to them. "Then, we shred them," Anderson said.
Some area housing specialists, however, question the propriety and necessity of the tenant-screening firms. Oliver Brown, housing specialist with the Montgomery County Human Relations Commission, said, "Applicants are unable to verify the source and accuracy of the information the services provide to landlords. They are able to pass on information which could be a violation of someone's confidentiality rights."
The services are "overzealous," Brown said, since tenant information is available through well-established collection methods. In one case, he said, a landlord rejected a prospective tenant because of RentCheck's report of a late rent charge of less than $5. The usual means of checking the employment and credit history, the income status and the fact that tenants have to pay up to two months' security deposit provide landlords with enough security to guarantee the suitability of applicants, said Brown. Two Washington-based rental agents concur with Brown's assessment. Both Buck Waller, a property manager with Yarmouth Management Co., and Willie Mae Alshadly, property manager with Millicent Chatel Associates Inc., were critical of tenant-screening services. "These services put another person between the prospective tenant and us," Brown said.
No federal law now shields tenants from the misuse of information. But Reps. Charles E. Schumer and Major R. Owens, both Brooklyn Democrats, introduced legislation last May to limit such inquiries which Schumer calls "a genuine threat to all tenants."
The legislation would place the largely unregulated tenant-screening services under the provisions of the Fair Credit Reporting Act. It would sharply limit the ability of firms such as Tenantcheck and RentCheck to report information that is not directly related to legal or financial data. The legislation, now before the House Consumer Affairs Subcommittee, would:Allow those who have been checked to have access to the data concerning them and make corrections if warranted. Prohibit the reporting of a tenant's membership in a tenant organization. Ban any reference to a tenant's reporting of a building violation to local or state agencies. Prohibit the disclosure of a tenant's requests for repairs or maintenance. Stop the reporting of tenants who legally withhold rent in accord with local laws. Prevent screening services from reporting legal action unless the landlord has won and the action took place within one year of the issuance of the report to the prospective landlord. Provide for advance notification to consumers when they are the subject of a tenant report.
"Tight rental markets like the Washington metro area which has about 2 percent vacancies in apartment buildings are fertile grounds for the proliferation of tenant-screening services," Schumer said. "But while these businesses can slip into a market unbeknownst to the consumer, they will have a potentially disastrous effect on the lives of renters.
"Unfortunately," he said, "the laws protecting consumers have lagged far behind society's electronic capacity to gather information, track, catalogue and index and spy on consumers. We may not be able to prevent the dawn of the age of Big Brother, but we can make sure that consumers know he is watching."