On May 2, 2024, the U.S. Department of Housing and Urban Development (HUD) released two guidance documents addressing the application of the Fair Housing Act to two areas in which the use of artificial intelligence (AI) poses particular concerns: the tenant screening process and its application to the advertising of housing opportunities through online platforms that use targeted ads.
This guidance from HUD details very specific details about screening services can and can’t be included in reports.
As a general matter, tenant screening companies should serve to help implement, rather than effectively set, a housing provider’s screening policies… To that end, screening companies should offer customizability, for example as to criteria, standards, and weights. Screening companies should not offer options likely to pose fair housing concerns …
Denial recommendations or low “grades” should not be provided to housing providers in a conclusory fashion. Rather, screening reports should include all available relevant details about the basis for the determination (e.g., dates, locations, case numbers, and dispositions). Screening reports should also list all sources from which data about the applicant was drawn and state the standard that would have been needed for a positive result. These details should be in plain language, so a lay person can easily understand the reasons for the denial.
With this guidance provided by HUD, property owners should review their screening services and ensure that the service they are using complies with HUD’s new guidelines.
HUD says that the announcement was made in accordance with President Joe Biden’s Executive Order, which called on HUD to provide guidance to combat discrimination enabled by automated or algorithmic tools used to make decisions about access to housing and in other real estate-related transactions.
A New Way of Looking at Tenant Screening
The 24-page tenant screening guidance document details the many ways in which the use of AI in tenant screening can result in discrimination. Bad or incomplete data on credit scores, eviction history (sometimes evictions are noted on public records even if the case was decided in favor of the tenant), and criminal record data (which has problems similar to those related to eviction history), can particularly effect people of color and those with disabilities disproportionally decreasing their chances of having a successful application.
AI algorithms, the document says, do not always take these factors into proper consideration.
The guidance then suggests best practices for fair, transparent, and non-discriminatory tenant screening policies, for both housing providers and companies that offer tenant screening services. The tenant screening guidance makes clear that use of third-party screening companies, including those that use artificial intelligence or other advanced technologies, must comply with the Fair Housing Act, and ensure that all housing applicants are given an equal opportunity to be evaluated on their own merit.
Additionally, HUD notes that the criteria used for determining eligibility needs to be made transparent and use plain writing. Moreover, HUD requires that properties using credit ratings as a consideration include processes and policies for applicants to dispute the credit rating.
The applicant should then be given the opportunity to dispute the accuracy or completeness of any negative information, for example by demonstrating that a record belongs to another person with a similar name or omits a court decision in their favor. The applicant should also get the chance to show – even if a negative record is accurate – that they will comply with their tenancy obligations regardless.
The Perils of Artificial Intelligence in Online Advertising
HUD identifies AI-generated online advertising as potentially discriminatory because these automated systems can cut out entire swaths of the population without the advertiser’s direction or knowledge. The Fair Housing Act makes it clear that housing-related ads cannot be targeted away from any of the seven protected classes: race, color, religion, sex (including sexual orientation and gender identity), national origin, familial status (children under eighteen being present, seeking of legal custody, or pregnancy), or disability.
The complete guidance for use of online platforms can be found here here.
HUD adds that the release of these guidance documents follows the agency’s pledge, made in an April 4th joint statement with other federal agencies, to enforce civil rights laws as new technologies like artificial intelligence become more common. HUD’s release of the tenant screening guidance also fulfils a commitment HUD made in the Biden-Harris Administration’s Blueprint for a Renters Bill of Rights.
