It’s safe to assume that you are impacted from the Equifax data breach. With over 143 million consumer records stolen in the breach, odds are that you are affected in various ways — as a consumer and as a landlord. Importantly, as a landlord, we need to review how this impacts your tenant screening process.
First, let’s talk about what will happen with this data:
- Hackers will sell and re-sell this data in the underground
- It will be used to refresh data on already-existing stolen identity records, say for instance, to update phone numbers and other data that goes stale quickly
- The data will be used in large part to take over existing accounts, like bank accounts, and create new fictitious accounts
The possibilities are broad. By and large, this data was stolen by hackers and will be re-sold to hackers to create and take over identities.
How the Equifax Data Breach Impacts Your Tenant Screening
For clarity, let’s categorize the potential impacts into short-term and long-term.
Short-Term Tenant Screening Impacts
There are three primary ramifications to consider:
- Manage the fraud risk and be alert that fraud could be on the rise
- Acknowledge that more applicants will have credit freezes
- Handle disputes effectively
Here’s what you can do to proactively mitigate risk:
Address the Fraud Risk
Be extra diligent in your efforts to validate identity. Your standing background process may be sufficient to uncover identity fraud, but give pause and make sure your process is tight.
- Use all resources to look up identities, both online and traditional sources. Gather multiple documents from your candidates including bank statements, drivers license/proof of identity, credit card statements – documents that list name and address. Ensure the information matches the completed rental application. Knowing that financial account takeover is easier , multiple documents and specific questions are your best ally.
- When a background report is returned with alerts or mis-matched information, ask your applicant. Dig deeper. Sometimes the answer is easy enough like the candidate is a salesperson and the address is their public work address rather than their specific home (office) address. Other times you may unveil inconsistencies.
Discuss Applicant Credit Freezes
Credit freezes are on the rise after the breach. All three bureaus are already reporting increases. In order to run a background on your candidate, the freeze must be lifted by the candidate.
Talk to your candidates up front about this to save time and frustration for everyone.
Many applicants forget about their freeze or associate the freeze in their minds more with credit cards and loans – it is not natural for them to associate looking for a rental and lifting their credit freeze. Ask proactively and emphasize the importance for a timely and hassle-free process.
If your candidate has a credit freeze with TransUnion, that will directly affect transactions run on RentMarketplace. Candidates will need to call the TransUnion Security Freeze line at 888.909.8872 and have the lift temporarily lifted.
Handle Disputes Effectively
When you do perform a background check, if you take any ‘adverse action’ based in whole or in part on anything from your background report, you are obligated under the Fair Credit Reporting Act (FCRA) to provide an Adverse Action letter to the candidate. Adverse action is a decline or conditional acceptance, so this includes, for example, requiring an additional security deposit.
This provides your candidate the opportunity to know what is in the background, and how to correct the data if it is incorrect. The letter explains the reason for the adverse action and how to follow up. Refer to our Compliance Guide for more information.
This breach is unique in that your key sensitive personally-identifying information (SPII) was revealed. Basically, the risk of fraud is for life and is broad-based. Education is the key yet again to risk mitigation.
Gartner analyst Avivah Litan, a well-respected fraud and identity authentication analyst, states:
Based on what I’ve seen in the past, I would estimate that less than 5% of Americans will have new loans, bank accounts, credit cards and other financial accounts taken out by a criminal in their name over their lifetime. And while everyone is advocating getting a credit freeze on your credit bureau file, my view is that will only protect you from less than 5% of the types of financial crimes that can happen to you.
So, in the grand scheme, the direct risk exists but perhaps at a moderate level. We can all expect some regulatory reform as Elizabeth Warren takes aim at the breach and overall consumer reporting agencies. Some positive reform is in the works already with the National Consumer Assistance Plan. It’s a complex argument as consumers enjoy the lightning-fast speed of instant credit approvals but need more protections.
Know that you are impacted by this breach — as a consumer and as a landlord — and that you should re-visit your tenant screening procedures. This data will be sold and re-sold on the black market, most commonly to take over financial accounts and identities.
Near term, be proactive by re-visiting your screening procedures. Use multiple documents and sources to validate identity, ask specific questions to verify information, and be on alert. Speak proactively with rental candidates about lifting any credit freezes for a more efficient process. Longer term, remain education on consumer credit regulatory reform.
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