RHOL will not assist a landlord in obtaining credit reports except by following federal and state law.

Although, the Federal Fair Credit Reporting Act allows consumer credit information to be obtained by anyone with a "ligament business purpose" , some states, like New York, also require the tenants written permission.

Please do not try to obtain credit reports without permission

Never try to obtain credit information under false pretences

Note the following case:

NEW YORK 1999 Two prospective tenants sued a rental property broker and his business associate for obtaining their credit reports without permission.

 The Scotts brothers looked at a rental house managed by a real estate broker named Simonoff. The Scotts brothers were accompanied during the showing by their own (buyer) broker.

The prospective tenants offered slightly less than the landlords' asking price, and Simonoff asked them for background information. According to the Scotts, one of the brothers responded to Simonoff's request for his Social Security number by telling Simonoff he wasn't authorized to make a credit check. The other brother said he too told Simonoff he didn't want a credit check. The brothers claimed Simonoff assured them he wouldn't run a credit check.

The Scotts' broker corroborated the brothers' account. Simonoff, however, said he told the brothers that the owner required a credit check and that one of the brothers merely requested "that if at all possible," the broker not run a credit check.

Simonoff said that when he conveyed the Scotts' rent offer to the landlord, he insisted on credit checks and tenant screening. Simonoff asked a friend who owned a real estate finance business to check the Scotts' credit, allegedly saying he had the Scotts' written authorization. The friend obtained the reports by falsely representing to a credit agency that he needed the reports to evaluate a mortgage application and then gave the reports to Simonoff. Simonoff later gave the Scotts a copy of one of the reports after the Scotts' broker told them Simonoff had pulled their reports.

The Scotts sued Simonoff, claiming he obtained and used their credit reports without proper notice or authorization and by means of false pretenses, in violation of the federal Fair Credit Reporting Act and the New York Fair Credit Reporting Act.

The federal statute made it a crime for any person to knowingly obtain consumer credit information under false pretenses. The state statute forbid anyone from requesting a consumer report unless the applicant was first notified in writing of his or her rights and that a report might be requested.

The court awarded Simonoff judgment without a trial, finding the pending lease transaction between the Scotts and the landlord was a legitimate reason for requesting a credit report. 

According to the court, because Simonoff had a legitimate - albeit unstated - reason for requesting the report, he didn't violate the federal statute by getting the report under false pretenses. The court also found Simonoff complied with the state statute's requirement for written notification by telling the Scotts that credit reports might be necessary and by sending them a copy of a report.

The Scotts appealed.

DECISION: Reversed in part.

A trial was needed to determine whether Simonoff violated the federal statute. The Scotts, not Simonoff, were entitled to judgment on whether Simonoff violated the state statute by failing to notify them of their rights in writing before he pulled their reports.

The trial court was correct that someone who requested a report didn't violate the federal statute by requesting a report, even by false pretenses, if he or she had a legitimate business reason. Though the Act prohibited obtaining information under false pretenses, it also allowed reporting services to give credit information to anyone it reasonably believed had a "legitimate business need" for the information.

However, a trial was needed to determine whether Simonoff really had a legitimate need for the Scotts' credit reports. A jury could find the Scotts conditioned their offer to rent on the landlord's willingness to forego a credit check. If so, Simonoff knew there was no longer a pending transaction between the landlord and the Scotts as soon as the landlord insisted on the credit reports.

Because Simonoff didn't show he notified the Scotts in writing about their rights under the state statute before he requested their credit reports, the Scotts were entitled to judgment without a trial on this claim. The trial court incorrectly found that Simonoff's after-the-fact transmission of copies of the credit reports satisfied the state statute. The statute clearly required Simonoff to notify the Scotts of their rights before he requested credit reports, and sending them copies of the report after he received them didn't excuse his failure to give them proper notice.

Scott v. Real Estate Finance Group, 2nd U.S. Circuit Court of Appeals, No. 98-7935 (1999).

see also:
Advanced Conservation Systems Inc. v. Long Island Lighting Co., 934 F.Supp. 53 (1996).

Baker v. Bronx-Westchester Investigations Inc., 850 F.Supp. 260 (1994).