August 21, 2025

Legal Considerations and Compliance For Tenant ID Verification

Noah Goldman

Chief Operating Officer

Quick Insights

Identity verification is a must-have in tenant screening. It can help detect fraud, and it provides data for running background and credit checks.
Let applicants know how you’ll use their ID to run checks. Always gather written consent from applicants before requesting reports.
Laws at the local, state, and federal levels regulate how you can use IDs and consumer reports in rental decisions. These laws include the Fair Housing Act and Fair Credit Reporting Act.
Use the same ID requirements for all applicants. Asking some applicants for certain documents but not others could violate the Fair Housing Act.
Laws and regulations change over time—stay up-to-date by following local chapters of industry groups, like the National Apartment Association or National Multifamily Housing Council.
You can deter lawsuits by adopting a compliant policy that uses consistent, objective screening criteria.
Don’t forget to incorporate secure data storage and handling into your workflows. Provide regular compliance and cybersecurity training to staff.
Consult legal experts as you develop your policies, and keep their contact info in the event of a dispute.

Federal Laws and Regulations

Federal laws control how you can gather and use applicant information to make rental decisions. Two pieces of legislation, the Fair Housing Act (FHA) and Fair Credit Reporting Act (FCRA), have the most impact on future tenants and rentals.

Fair Housing Act

The Fair Housing Act regulates how real estate companies can decide who to lease, loan, or sell to. The FHA covers almost all housing and rental decisions with a few exceptions, like sales or rentals by owner without the use of an agent.

The FHA protects renters or prospective homeowners from discrimination based on characteristics, like:

Race
Color
National origin
Religion
Sex
Family status
Disability

Refusing to rent an apartment, lend a mortgage, or sell a house to someone because they have one or more of these characteristics violates the FHA.

FHA violations can creep into tenant screening when property managers ask illegal questions or use inconsistent criteria. For example, if you ask applicants which country they’re from and only run fraud checks on IDs from a certain country, that would be considered discriminatory under the FHA.

So, set a single policy on which ID documents are acceptable for all applications. Perform the same fraud checks on every ID. And if concerns come up, always follow the same procedure to clarify the issue or reject the application.

Pro tip: Simplify your ID verification with an accurate tool that can perform multiple checks on thousands of global ID types in seconds.

Fair Credit Reporting Act

Credit and background checks provide crucial information, like:

Financial stability
Criminal history
Data you can cross-reference when looking for fraud

But don’t go rushing to request these reports right away—the Fair Credit Reporting Act protects consumers from unauthorized collection and misuse of their data. It also gives them rights regarding the accuracy and security of their reports.

The FCRA applies to all consumer reporting agencies, including:

Credit bureaus, like Equifax or Experian
Medical information companies like the Medical Information Bureau
Tenant screening services, like Appfolio or RentGrow

Under the FCRA, consumers must give written consent before anyone can request a report about them. Additionally, anyone requesting a consumer report must have a legitimate purpose. Reporting agencies have to verify the requester and their reason before sharing any consumer data.

So, if you’re using background and credit reports when checking for ID fraud, get written permission first and let applicants know about their right to dispute the information in a consumer report, receive a copy of the report if you decide to reject their application, and know the name of the agency that issued the report.

State and Local Laws

Each city, county, or state likely has its own regulations beyond the FHA and FCRA. These regulations cover rental applications, including ID verification, consumer reports, and data privacy.

State-Specific Regulations

Many states have passed their state-specific fair housing laws to offer more protections to renters, like:

Beyond fair housing, some states also have their own data privacy laws. Many of these laws are similar to the European Union’s General Data Protection Regulation (GDPR). These rules provide broad consumer protections and place obligations on businesses to:

Implement data security policies to protect consumer data
Avoid discrimination in their practices
Disclose when they collect and sell consumer information
Create and enforce privacy policies

State-specific laws include the California Consumer Privacy Act (CCPA), the Colorado Privacy Act, the Virginia Consumer Data Protection Act, and the Washington Privacy Act.

Plus, some states require the acceptance of reusable or “portable” tenant screening reports. In these states—like California, Maryland, Washington, and Wisconsin—tenants are allowed to bring their own report.

Each state has unique rules around how recent the report must be and which application fees, if any, you can charge if a tenant uses their own report.

Local Ordinances

Below the state level, cities and counties may issue controls on tenant screening, which you can typically find on your city or county’s website. Cities often have landlord-tenant handbooks or a renter’s guide that outline these policies, like:

Staying up-to-date with local ordinances is crucial. Bookmark your local housing and rental websites and check them often for changes. Consider working with a real estate legal professional who can help you keep your policies up to date.

Industry Standards and Best Practices

You don’t have to start from scratch when building your tenant screening and ID verification workflows. Professional organizations issue guidelines for building a thorough and compliant screening process.

Professional Guidelines

Industry groups like the National Multifamily Housing Council (NMHC), the National Apartment Association (NAA), and the National Association of Realtors (NAR) all have advice for creating compliant policies:

Use the same criteria for all applications. Pose the same set of questions to every applicant—if you ask one applicant a question, ask every applicant that question.
Make your screening policies publicly available and review the process with each renter before they start an application.
Don’t ask about protected characteristics, like national origin or family status.
Deliver rejections—also known as adverse action notices or denial letters—in writing. Attach any reports that influenced the decision.

You can also look to the public sector for help. Government agencies like the Department of Housing and Urban Development (HUD) give guidance, too. In 2024, HUD published a comprehensive set of guidelines on the FHA and tenant screening.

Their recommendations included:

Customize tenant screening policies to each property. Don’t rely on a screening company’s default settings.
Even if a third-party service gives you a recommendation to approve or deny, evaluate all applications yourself.
Tell applicants how they can dispute inaccuracies in their consumer reports.
Independently review your third-party tools for FHA and FCRA compliance.

Pro tip: Look for providers that build compliance into their products and have received certification for data security standards, like SOC 2.

Ethical Considerations

Rental decisions can have long-term impacts on your business. Renting to bad tenants can lead to missed rent, property damage, and even evictions, so it’s natural to want a rigorous and in-depth tenant screening process.

But ethics should play an important role in your operations, too. How you treat prospective and current residents affects how you attract and retain great tenants.

Residents want you to treat them fairly and respect their privacy. They’re looking for someone who will respect them beyond the rights in the FCRA and FHA, so ask for only the information you absolutely need.

Review their application comprehensively—evaluating credit, rental, and criminal history as parts of a whole.

Creating a Compliant Screening Process

To stay on the right side of the law, start by developing a holistic and compliant policy. This policy only helps if your team follows it, so budget time and expenses for training.

Compliance takes vigilance, and it doesn’t stop once you’ve finalized your policy. Keep in mind that laws will evolve, so stay informed, be prepared to make updates, and re-train your team as needed.

Policy Development

To start, create a screening policy using objective tenant selection criteria. What are you looking for in a tenant, and what information do you need to know? These criteria might include a strong credit score, a solid rent-to-income ratio, and a positive rental history.

You must apply these criteria consistently in every single application. Never ask about protected characteristics like race or national origin, and don’t include these categories in your selection criteria.

Next, create a tenant screening form to collect information like ID, rental history, and income. Include authorization forms to run background checks and contact references.

Unsure about whether you’ve covered all your compliance bases? Consider consulting a legal professional. A lawyer can double-check your work, answer compliance questions, and provide suggestions.

Pro tip: Guarding against application fraud can be time-consuming. Look for services like automated income verification and document fraud detection to speed up the process.

Employee Training

A compliant policy only works if all employees follow it, so you’ll want to hold regular staff meetings on topics like:

Legal requirements. Review changes to applicable local, state, and federal laws, and refresh your team on existing legal policies. Cover how to respond legally to disputes or report suspected fraud.
Data security. Government IDs, credit reports, and other financial records all contain sensitive data. Emphasize secure document storage and cybersecurity best practices, like multi-factor authentication and encryption.
Tenant screening tools. Onboard all new hires onto your tenant screening services and require ongoing training to ensure they’re using the tools in compliance with your policies.

Document Management and Privacy

A thorough tenant screening process means gathering a wealth of sensitive personal information. Data that’s not securely stored could lead to data breaches, which can hurt both you and the resident.

Your tenant is now at risk of identity theft. Meanwhile, your business may be facing fines and reputational damage.

Secure Handling of Information

The idea of collecting and storing sensitive data might be overwhelming—even scary. But many third-party tools handle the data for you, so you can rest easy. For example, some services send the possible resident an application link that takes them to a secure online form.

These online applications often include secure ID verification with liveness and biometric checks. Then, the service will run reports, gather the results, and send them to you securely—no data handling involved.

For the data you do hold onto, make sure your team follows cybersecurity best practices, like:

Adopting multi-factor or two-factor authentication for logins
Storing data on encrypted servers
Requiring strong passwords for all logins
Requiring employees to take regular cybersecurity training

Record Keeping

Even if it seems safest to destroy all applicant data as soon as the process is over, don’t hit “Delete” just yet. It may take months for disputes to come up.

Instead of clearing out application data ASAP, hold onto all documentation until the statute of limitations has run out—this could be anywhere from 2-7 years. To be on the safe side, the National Association of Realtors recommends keeping records for at least 10 years. When in doubt, consult a legal professional for advice.

And once the clock runs out, be sure to destroy all records according to the Federal Trade Commission’s disposal rule. Shred paper copies and fully delete all digital records.

Responding to Legal Challenges

Despite your best efforts to stay compliant, you might still get some discrimination accusations. Responding to disputes and complaints can be challenging, but you can protect yourself with a few key best practices.

Handling Disputes and Complaints

If an applicant’s identity verification failed, ask for clarification first. Potential residents often have explanations for minor red flags. If applicable, accept alternative documents to corroborate their identity, like:

Utility bills
Debit or credit card (bonus points if it includes a photo)
School ID cards with a photo
Marriage certificate
Birth certificate

Remember—always offer the same ID verification options to all applicants. Never ask for additional documentation because of protected characteristics.

Consulting Legal Experts

Compliance isn’t DIY, so don’t be afraid to call in the professionals. It’s helpful to have legal resources available to you before, during, and after a dispute.

As you develop your tenant screening policy, tools, and forms, run your work by a trusted legal professional. They can review your work and suggest changes.

If an applicant is threatening a lawsuit or you’ve already been served, don’t wait—consult a legal professional as soon as possible. A lawyer can provide guidance, help you communicate with the applicant, and manage any legal next steps.

Staying Updated with Legal Changes

Compliance is an ongoing process, one that evolves as laws and regulations change. As they do, you’ll need to stay updated on the latest changes and update your policies to match.

Monitoring Changes in Laws

Multiple online resources can help you keep track of new laws and regulations. Like the NAA’s Operational Resources Library, which includes a Fair Housing News section. Similarly, the NMHC has industry topic pages, including news and updates, on areas like:

Adapting Policies and Procedures

Your screening policies aren’t set in stone. Regularly review your screening process and your team’s work. If you notice issues, don’t be afraid to make changes to your policy or give your team more training.

Your tenant screening policy should be a living document that changes as legal requirements evolve. As you learn about new requirements, reach out to legal professionals for guidance on how to incorporate changes.

Balance Compliance with Strong Fraud Prevention

Screening tenants places your business under a variety of legal restrictions, including anti-discrimination and consumer privacy laws. Understanding your legal obligations is the first step toward compliance.

A legally compliant screening process will protect your business from potential lawsuits while safeguarding your community from the fallout from fraud. Use consistent, objective screening criteria, and never ask about protected characteristics. Handle applicant data safely, and train your team on security and compliance.

Knowledge is power—stay educated on the latest in tenant screening best practices and regulations. Follow industry organizations, government agencies, and legal resources to stay in the know. And if you have questions, need to update your policies, or are facing a discrimination accusation, contact a legal professional.

Additional Resources

Multiple industry, government, and legal resources can help you navigate the compliance landscape. Take a look.

Snappt Resources

We’ve covered multiple compliance and legal topics in our resource center:

Legal Resources

Several websites, like Nolo and Justia, publish pages on tenant screening and fair housing topics:

Industry Resources

Groups like the NAA, NAR, and NMHC have their own resources on fair housing and tenant screening:

Resident Screening Operational Resources, including sample adverse action notices and HUD guides
The Fair Housing Map is useful for digging into state and local regulations
Fair Housing Compiled Resources includes links to training, government websites, and related topics, like bias override
Fair Housing Industry Topics page features a fact sheet, news, advocacy, and resources sections
Resident Screening and Consumer Reporting Topics page includes a webinar, fact sheet, white paper, and podcast

Government Resources

For government resources, check out agencies like HUD, the Department of Justice, and the Consumer Financial Protection Bureau:

HUD Exchange offers a training program as well as a resources page.
The Department of Justice’s Civil Rights Division includes a page on Housing and Civil Enforcement.
The Consumer Financial Protection Bureau offers compliance resources to help consumer reporting agencies comply with the FCRA.