Mixed Files Discussed by New York Times

Father-Son, Mother-Daughter, Junior-Senior-Trey [Generational Designators], Common Names, Variations on Social Security Numbers and Other Mixed File Issues
David A. Szwak

Mixed Files Discussed by New York Times

Postby David A. Szwak » Sun Jan 01, 2006 9:05 pm

October 12, 2003
When the Credit Check Is Only the Start

In the old days, way back when faxing seemed innovative, selecting the right tenant for a vacant apartment usually required a building owner or manager to phone the previous landlord, talk with the applicant's employer, scan letters of recommendation, closely study the standard credit report and, sometimes, simply sit across the table and look the prospect in the eye.

These days, when far more than a would-be tenant's creditworthiness and job history can immediately be scrutinized, that process seems somewhat archaic.

A handful of new national companies - estimates range from a half dozen to two dozen - are attempting to revolutionize tenant screening.

Landlords who subscribe to these services can mouse-click into utility bill records, eviction proceedings, bankruptcy and tax lien files. They can check national criminal databases, sex offender lists, the Treasury Department's Web site of suspected terrorists, drug traffickers and money launderers. They can even - at least through one company - examine previous landlords' assessments of a tenant's habits: noisy? destructive? litigious? drug using?

The chief executive of one of the most comprehensive of those screening companies, Jeff Cronrod of Fidelity Information in Pacific Palisades, Calif., said that approximately 8,000 building owners and management companies subscribe to his service, and about 50,000 prospective tenants are screened each month. "We're approaching a million tenants who have been screened in one way or another" since the company evolved from a rent collection agency in 1995, he said.

Such services could prove attractive to co-op and condominium boards, particularly in the New York area where potential buyers are more rigorously screened than perhaps anywhere else in the country.

Stuart M. Saft, chairman of the Council of New York Cooperatives and Condominiums, said he was aware of isolated instances where boards have used a national screening company to dig deeper after specific concerns about a buyer arose. "But when they become aware of the ready availability of more detailed information," Mr. Saft said, "many boards will probably choose to utilize these services."

Mr. Cronrod of Fidelity Information said: "Landlords have a right to know who is going to be living in their building, and so do the tenants who are already there. In these times, it's important to know who we are dealing with, not just apartment owners, but all of us - employers, lenders, even on a personal level. Sometimes we have to give up a little bit of privacy to feel more secure."

Privacy rights advocates are concerned.

They worry about "mixed files," instances where someone is denied a place to live because their name is similar to someone with a blemished record. They worry about identity theft, about who inputs the information and who has access to it. They worry about incomplete records from housing court, indicating that a case has been filed but not disclosing the outcome, or even that it was the tenant who sued the landlord.

"Even if the tenant prevails," said Beth Givens, director of the Privacy Rights Clearinghouse, a nonprofit public advocacy group in San Diego, "that information becomes a part of these tenant screening services and the tenant ends up blacklisted."

Larry Rosenberg is president of Rent-direct.com, an Internet company that provides information to would-be renters about apartments available in what he says are approximately 15,000 buildings in the five boroughs, Westchester County and northeastern New Jersey. For a fee of $195, apartment seekers can click into the company's listings for up to three months.

But Mr. Rosenberg's company is also, in effect, a regional distributor for the national tenant screening companies hoping to replace the local mom-and-pop operations that still, to a large extent, dominate the screening industry.

"What we have is a Web site portal for the landlords who give us listings," Mr. Rosenberg said. "We wanted to offer them a one-stop-shop service for not only listing and renting their apartments, but also for following up on any tenant they want to screen."

"In the past," he continued, "everything had to be faxed over to the company that was doing it; these were small, locally based companies. And then you would wait hours and sometimes a day or two to eagerly find out if your prospect met the requirements."

Now, it takes minutes. "Once you're set up," Mr. Rosenberg said, "it's a snap to get any kind of tenant screening quickly and cheaply."

John Restivo, the president of a national screening company, Youcheckcredit.com, said: "We all kind of do the same things: credit reports, eviction reports, criminal reports, sex offender lists, which is separate from criminal. And once the client decides which services they want to order, they click `submit' and wait 5 to 10 seconds and an easy to read report comes up." The cost of a search by Youcheckcredit.com into each prospective tenant's background is $9.95 to $34.95, depending on its components.

Mr. Cronrod, at Fidelity Information, detailed his company's screening menu. "These are retail prices, and our larger clients pay less," he said. The basic report, costing $9.95 for each prospective tenant, provides only the applicant's credit history from one of the three major national credit reporting companies: Equifax, TransUnion or Experian.

"The next is Tenant Alert Extra," Mr. Cronrod said - for $12.95. "You get the basic report, plus Matchmaker kicks in - that's where the landlord can set his own parameters."

About 30 specific ways of filtering the information are available. "But, for example, if you were a property owner," Mr. Cronrod said, "a simple one would be that you want the tenant to earn at least three times the amount of the rent. Or you may want him to have no more than two collection accounts; that means he's been turned over to a collection agency."

The landlord might choose to rule out any applicant who has not held his current job for at least a year. "But you could set whatever parameters you want," Mr. Cronrod said, "earnings ratio; how long was he at his previous address; how much debt on his credit cards; how many times he's been late more than 30 days, 60 days, 90 days, 120 days."

This level of service can also, among other things, analyze the applicant's utility payment history: gas, electric, water, telephone. "What you're doing is sort of creating the perfect applicant, setting the bar," Mr. Cronrod said.

The next package is called Tenant Alert Eviction, for $15.95. "It includes everything I already mentioned plus a nationwide eviction search," Mr. Cronrod said, "whether or not they've been evicted or ever skipped out."

"And it searches databases around the country for tenant history and habits," he said, "if they are an abusive tenant, whether they vandalized or made chronic late payments, even if they are up to date." His company, Mr. Cronrod said, also asks landlords who use his service to input assessments of their tenants' behavior.

The most comprehensive screening program available is Tenant Alert Value Package, for $29.95. "It's everything I've mentioned plus the criminal information," Mr. Cronrod said, "everything from someone who may have a history of domestic violence - that would play in the forefront of a landlord's concerns - and, of course, they look at other violent crimes as well."

Mr. Cronrod said his company "interfaces all of the state and local courts, with probably 30 or 40 repositories for criminal information - some national, some regional, some local" - as well as a national sex-offender database.

And then there is the "terrorist database that specifically comes from the Office of Foreign Assets Control in the Department of the Treasury," he said, "and that office collects information from the C.I.A., the F.B.I. and some other national security agencies. It's essentially a compilation of terrorists, money launderers and international drug traffickers."

Mr. Restivo of Youcheckcredit.com cited an instance where a national criminal search scored a hit. "We have a property in California that used to order a statewide criminal report," he said, "and one time they accidentally ordered the national."

"All the information on the applicant indicated that he had lived in Florida and New York," Mr. Restivo continued. "But it came out that he had committed an armed robbery in Arizona. With the national, it will pick up things, search areas that you don't even know to check."

"The guy had served his time," Mr. Restivo added. "No, he didn't get the apartment. You just don't want them living next to you."

Mr. Cronrod, asked what happens when a search of the Treasury Department's database scores a hit, said: "The computer will generate a report that this individual has applied for an apartment in Boca Raton or Manhattan or Long Island, wherever you like. We then are taken out of the loop, and the Treasury Department contacts the landlord, usually by phone, and talks about it."

FOR Ronni Lynn Arougheti, all of that is "a little bit scary."

Ms. Arougheti is president of Heron Ltd., managers of 95 buildings in the New York area, about a third of them rentals. "I don't think the managing agent's job is law enforcement," she said. "Mr. Cronrod's talking about heading in that direction."

"I absolutely am sympathetic to the fact that we don't want to rent to a terrorist, or people who would jeopardize other tenants in the building," Ms. Arougheti continued. "But there's got to be a balance between that Big Brother thing and the fact that these are people's homes."

Claudia Justy, executive director of the Community Housing Improvement Program, an association of 2,000 building owners - most of them midsized buildings in the boroughs outside of Manhattan - said she could not "speak for my membership on this."

"But would people want to use it?" Ms. Justy continued. "I think that any owner wants useful tools to manage their buildings. If this is proved to be something that would be more reliable than searches now, I'm sure people would be interested."

In the most affluent sections of the city, however, said Nancy Packes, president of Halstead/Feathered Nest Leasing Consultant, the instantaneous, broad-brush scrutiny of an apartment-seeker's history by the national companies would be "ludicrous."

Ms. Packes's company handles about 5,000 tenant applications a year. "When you're dealing with a higher-income tenant, which we typically are in Manhattan, these are solid citizens with long credit histories," she said. "It requires more of a personal touch: calling people, evaluating factors in relationship to each other. Usually, the prior landlord evaluates the tenant for the new landlord. Verification requires communication; it is not instant."

Using a national service, Ms. Packes said, "would be like going after a mosquito with an elephant gun."

Whatever the profile of those most likely to be scrutinized, privacy and civil liberties advocates raise red flags.

"We've had people contact us who are attempting to rent and find they've been essentially blacklisted," Ms. Givens of the Privacy Rights Clearinghouse said. It can happen in several ways.

"One is called `mixed files,' " said Chris Hoofnagle, associate director of the Electronic Privacy Information Center, a nonprofit group based in Washington. "It's where the information from one individual is combined with another."

It could happen to people "with similar names, not even the same name," Mr. Hoofnagle said, "or similar Social Security numbers."

The screening companies use algorithms - instructions sometimes based on overlapping factors - for their computer searches. "It means you might be identified not by your full name, but a part of your name," Mr. Hoofnagle said.

In July 2002, a federal jury in Oregon awarded a plaintiff $5.3 million in punitive damages in a case involving TransUnion, one of the three major credit reporting companies. "A woman named Judy Thomas was mixed with a woman named Judith Upton - yeah, Upton," Mr. Hoofnagle said. "Both women have a very similar Social Security number, so the algorithm couldn't distinguish between them."

"For years, she tried to solve the mixed-file problem," he said.

Mr. Restivo, however, said such mixups are rare. "It doesn't happen very often that we get these mixed files," he said. "You might get the son versus the father, a junior-senior situation. That's the only time I've ever seen it happen."

Identity theft is another concern.

Ms. Givens said, "If an impostor has used the victim's identity to rent an apartment, then not paid the bill, there's probably an eviction notice on record."

"They stay a few months and move out," she said, "but there's a court record with the innocent person's name on it. When the innocent individual attempts to find an apartment, they are turned away."

The Federal Trade Commission, in its 2003 Identity Theft Survey, found that there were 9.91 million victims of identity theft in the nation in 2002, with 2 percent - or about 200,000 - of those cases involving an impostor renting housing under an assumed name.

JAMES B. FISHMAN, a partner in the Manhattan law firm Fishman & Neil, which primarily represents tenants, said another serious problem is the use of housing court case filings, rather than judgments or final dispositions, by the screening companies. "This system drags into it all tenants who have been named in housing court proceedings, regardless of whether there's any degree of fault on their part," he said.

Under a Freedom of Information Act request, Mr. Fishman received a copy of the New York State court system's Revenue Generation Report, which shows that for the year ended on March 31, 2002, approximately 25 companies paid a total of $1,089,424 for the purchase of housing court records. "It's absolutely not just closed cases," he said. "A lot of the reports simply say, `Case Filed,' and not the disposition, the actual outcome."

At the same time, Mr. Fishman said, his information request showed that the court system "sells the records for those cases where it was the tenant who sued the landlord, let's say in order to get repairs, because those are also brought in housing court. I think that's pretty scary."

Even when there are grounds for a tenant to be taken to court, the effects can be disproportionate and long lasting. A client of Mr. Fishman, who spoke on condition of anonymity, said that in 1996 and '97, after she became seriously ill and fell behind on the rent for her Midtown apartment, she was taken to court three times. In one case she was able to repay the full rent; in another a settlement was reached; and after the third case she moved out, living, over the last five years, first with a friend and then by subletting a co-op.

Now, with the sublet apartment having been sold - and back on her feet - the woman has had applications for several rental apartments rejected. "I got this letter from the credit company showing that there have been three cases filed against me in housing court," she said. "What it never showed was the disposition of the cases. The problem happened five years ago. You're a deadbeat for the rest of your life?"

Cases like that, said Mr. Hoofnagle of the Electronic Privacy Information Center, compromise "the concept of social forgiveness, that past mistakes are eventually forgiven."

To be sure, Mr. Hoofnagle said: "We are talking about renting people's property, and landlords should have some say over who lives in their buildings. However, the risk of tenant screening is that it can create a category of people who can't find anywhere to live."

Donna Lieberman, executive director of the New York Civil Liberties Union, agrees that "it is understandable and appropriate that landlords engage in reference checks."

At the same time, there are broader concerns, Ms. Lieberman insisted, particularly about screening companies tapping into databases like the one maintained by the Department of the Treasury. "Who knows how a person gets on the list, how you get off the list," she wondered. "Who is investigating the people who get access to the list to make sure they are not abusing it?"

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