Red Flag Rules
NOTICE REGARDING THE FTC’S NEW IDENTITY THEFT REGULATIONS
The Federal Trade Commission (FTC) and other governmental agencies recently promulgated the Identity Theft Red Flag Rules, pursuant to a mandate of the Fair Credit Reporting Act.These regulations were passed in an effort to thwart identity theft.Generally, the regulations apply to all “users” of consumer reports, “creditors” and “financial institutions”.Because you may be considered a “user” under these regulations, we wanted to update you about these new requirements.
The regulations define a “user” of a consumer report that includes entities such as landlords and property managers who obtain consumer reports from consumer reporting agencies (CRA’s) for the purpose of making rental housing decisions.
This part of the regulation applies only to consumer reports obtained from “nationwide CRA’s” which are CRA’s who “maintain credit” information.As such, “users” will likely be limited to any entity that obtains credit reports or other information (such as social security number trace information) from credit bureaus (or from another third party that gets the information from a credit bureau).
Basically, the regulations require all such users to implement a written policy to respond to any “notices of address discrepancy” they receive from a nationwide CRA.Such a policy must be designed to help the user form a “reasonable belief” that the consumer report and the consumer (your rental applicant) match – that is, that they both refer to the same individual, and that the individual is the one for whom the user requested a consumer report in the first place.The regulations give examples of types of actions a user can take to form such a reasonable belief.
As a service to our clients, we are attaching a sample policy & procedure for your convenience.Please note, this is not to be construed as legal advice or counsel, and you should check with your own attorney to see if you fall under these new regulations.
PROCEDURE IN THE CASE OF NOTICE OF ADDRESS DISCREPANCY POLICY
As part of its rental application process, [Landlord] conducts background checks on all otherwise qualified rental applicants, including co-signors to any lease, (collectively herein referred to as “applicant”).. Part of this process entails conducting background investigations into applicants’ credit history. In order to detect, prevent, and mitigate identity theft from occurring, [Landlord] is committed to taking certain action when and if it is notified of an address discrepancy from a nationwide consumer reporting agency in accordance with the Federal Trade Commission’s Identity Theft Red Flag Regulations.
Notice of Address Discrepancy from a Nationwide Consumer Reporting Agency
Per the FTC’s Red Flag Regulations, nationwide consumer reporting agencies must notify [Landlord] any time there is a substantial difference between the address provided by [Landlord] when requesting a background investigation about an applicant, and the address(es) the nationwide consumer reporting agency has on file for the applicant.
[Landlord]’s Response to Address Discrepancy Notice
In response to receiving a notice of address discrepancy, [Landlord] will take the following steps to verify the address of the applicant and form a reasonable belief that knows the identity of the person to whom the consumer report pertains:
Step 1: Review its own records, such as rental applications or other documents provided during the application process to see what address it has on file for the consumer;
Step 2:Verify the address with the consumer, and ask him or her to explain any discrepancy;
If Steps 1 and 2 lead [Landlord] to reasonably believe that the person about whom [Landlord] ran the report, and the person referenced in the report is the same person, no further action is required.
If Steps 1 and 2 do not lead [Landlord] to form a reasonable belief that it knows the identity of the person to whom the consumer report pertains, [Landlord] will take the following additional steps:
Step 3:Research public records or perform SSN trace to find address of the person.
Step 4:Ask the applicant to provide at least two additional forms of documentation of his or her current name and address (i.e., driver’s license, utility bill, tax forms, etc.).
After [Landlord] investigates the address discrepancy by taking the above steps (as necessary), it will then contact the nationwide CRA (either directly or through its third party vendor) and inform it of the results of its address discrepancy investigation.
The “Notice of Address Discrepancy” will typically show up on the credit report as “Mismatch Alert” or “Address Discrepancy – a Substantial Difference Occurred”.
Watch for Suspicious Documents:
- Identification documents that appear to have been altered or forged
- The photograph or physical description on ID does not match your applicant
- The signature on the application does not match the ID
- The identification appears to have been destroyed /damaged and reassembled
- The rental application is illegible or incomplete
- Other information on the ID does not match what the applicant is telling you
Look closely at the credit report that you get back.In the Personal Information section:
- Check the three addresses that show up – are any the same that you submitted? Do any match the address listed on their identification or on the rental application?
- Check the Date of Birth (DOB) Is it consistent with your applicant’s age?
- The Social Security Number provided has not been issued or other SSN’s are listed
- Review the entire report – watch for Fraud Alerts, Active Duty or Consumer File Freezes
- On our AIM Social Security Trace Report, the SSN was issued before your applicant’s birthdate or the names and/or addresses do not match
The “Red Flags” and “Address Discrepancy” notices are not necessarily cause for immediate denial.Carefully review the discrepancy and investigate it further.Contact Tenant Data if you have any questions.
**Hint: On the Policy, with your word processing program use the “Replace” function under EDIT to replace [Landlord] with your name or business name. ‘Replace All’ will do all 11 at once.