Penalty Amount
$4,250,000
AppFolio, Inc., a tenant background report provider, settled with the FTC for $4.25 million over allegations it violated the Fair Credit Reporting Act by failing to implement reasonable procedures to ensure the accuracy of its screening reports and by including eviction and non-conviction criminal records older than seven years. The settlement prohibits including old records and requires maintaining accuracy procedures.
AppFolio must pay $4.25 million, is prohibited from including non-conviction criminal or eviction records older than seven years in its reports, and must maintain reasonable procedures to ensure the maximum possible accuracy of its background reports.
In-house legal teams should review all vendor and customer agreements where the company either provides or consumes tenant/background screening reports. Specifically examine clauses governing data accuracy, FCRA compliance certifications, data sourcing from third parties, and restrictions on the age of reported records (e.g., evictions, non-convictions). Agreements with property management clients (as vendors) may require amendments to mandate adherence to FCRA's 'reasonable procedures' standard and prohibit inclusion of records older than seven years. Contracts with third-party data providers should be scrutinized for warranties of accuracy and compliance. Consider adding audit rights, indemnification for FCRA violations, and explicit requirements for maintaining up-to-date accuracy procedures.
Entity
AppFolio, Inc.
Also known as: AppFolio
Industry
Data BrokerOfficial Press Release
https://www.ftc.gov/news-events/news/press-releases/2020/12/tenant-background-report-provider-settles-ftc-allegations-it-failed-follow-accuracy-requirements
ecf 1 us v appfolio complaint
https://www.ftc.gov/system/files/documents/cases/ecf_1_-_us_v_appfolio_complaint.pdf
ecf 2 us v appfolio stipulated order
https://www.ftc.gov/system/files/documents/cases/ecf_2_-_us_v_appfolio_stipulated_order.pdf
Federal Trade Commission Enforcement Page
https://www.ftc.gov/enforcement
"AppFolio, Inc."
"$4.25 million"
"Fair Credit Reporting Act (FCRA)"
"failed to implement reasonable procedures to ensure that criminal and eviction records it received from a third party vendor were accurate before including such information in its tenant screening reports."
"including eviction or non-conviction criminal records more than seven years old in its reports."
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$1.9M
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