RELEASING CREDIT REPORTS AND SOCIAL SECURITY NUMBERS
by Cathy L. Lucrezi, Attorney at Law (formerly of Heist, Weisse and Lucrezi)
The scenario usually goes like this: The tenant vacated and owes money to the owner. The owner is angry and wants to file a lawsuit against the tenant for the money owed or otherwise attempt some collection activity. The owner asks you to give him a copy of the credit report and/or social security number so he can collect the money owed. Should you release it? No.
The situation is controlled by the federal Fair Credit Reporting Act (FCRA). This is the same law that controls Equifax, Transunion, and other credit reporting agencies. The law states that if you provide credit-related information to others on a regular basis, you too are a credit reporting agency. So, in addition to being a property manager, you become a “CRA” subject to all the laws, regulations, and liabilities as Equifax. Not good.
A debtor (tenant or applicant) can sue for a violation of the FCRA, as can the Justice Department. Damages are awarded, even if there’s been no harm done to the debtor! Add attorney fees and court costs to that, and one has a very unhappy property manager.
The federal Fair Credit Reporting Act says that credit information can only be released for appropriate purposes. The word “appropriate” is defined by the law. It does NOT include releasing credit information for the purpose of suing to collect on a debt.
Aside from the FCRA, there is another reason to hold tight to that credit report and social security number. Identity theft is on the rise, with increasingly clever ways of using a person’s private information to cause financial havoc. By keeping the credit report and social security number totally secure, you limit your risk of liability to a tenant who becomes a victim of identity theft.
Two myths need to be debunked. One, the fact that the owner hired you as his agent and you obtained the report in that capacity of agent, does not change any of the advice above. This is true even though the owner may have paid for the credit report. The owner designated you as agent for the purpose (among others) of finding a tenant. Since he has delegated that authority to you, the owner has no appropriate purpose for the credit report.
A second myth involves releasing the credit report if the tenant gives written consent. This is NOT true. There is no form or document that is so carefully worded that would allow the release of the information. The debtor (the tenant) cannot waive his rights under the FCRA.
There are some very limited exceptions. If served a proper subpoena for the document, it can be released. If you are seeking legal advice involving the tenant, you can let your attorney see the document. Otherwise, keep that information under lock and key.
Unfortunately, many property owners do not care what the law is and feel they are entitled to the information. A savvy property manager will have the following clause in their management agreement which can diffuse a touchy situation:
Due to laws which may affect disclosure of private and credit information, LANDLORD shall not be provided with the TENANT’S credit report and/or application unless specifically authorized in writing by the TENANT(S) and the provider of the credit report.
Note: You will never get this authorization from the tenant and the credit report provider, but we recommend you place it in your management agreement so you can convince the owner that it is indeed not an option.
Blog Post by John Durham, Marketing/Communications Director with Excalibur Home Management, LLC
