A tenant blacklist, compiled by algorithm

Arroyo’s apartment complex advertised itself as pet friendly and non-discriminatory

Fair-housing advocates say a federal judge in Connecticut has opened the door to legal challenges of a practice on the cutting edge of housing discrimination: The outsourcing of tenant screening to companies that effectively blacklist rental applicants using computerized assessments of criminal records.

In what the Connecticut Fair Housing Center calls a “landmark civil rights decision,” U.S. District Court Judge Vanessa L. Bryant ruled that consumer reporting agencies that screen tenants for landlords must comply with the federal Fair Housing Act as the de facto arbiters of who gets an apartment, not merely providers of background information.

The ruling touches on two broad public policy debates now before Congress and state legislatures: The use and misuse of criminal records to assess fitness for employment, housing and credit; and the increasing use of hard-to-challenge computer algorithms to make those decisions.

Last year, the Connecticut Fair Housing Center and Carmen Arroyo sued CoreLogic of Irvine, Calif., a company that Arroyo says illegally discriminated against her severely disabled son, Mikhail, in 2016.

Arroyo, who was living in a one-bedroom apartment at ArtSpaces in Windham, applied for permission to move to a two-bedroom apartment in the complex and add Mikhail as a tenant. The application was denied after Mikhail was flagged by CoreLogic, a tenant screening company, for reasons not made clear.

CoreLogic offers a variety of screening tolls. CRIMCheck, the company says, “uncovers felony, misdemeanor and sex offender public records.” CRIMSafe, it says, is an “automated tool” that “processes and interprets criminal records and notifies leasing staff when criminal records are found that do not meet the criteria you establish for your community.”

Salmun Kazerounian, a lawyer with the Connecticut Fair Housing Center, said CoreLogic does not provide the criminal record, only a notice of a “disqualifying record.” Landlords like the service because it takes their employees out of a difficult and potentially litigious decision process of assessing an applicant, he said.

Instead of using a criminal record to assess whether a tenant poses a risk, it becomes an automatic disqualifier — a blunt instrument that offers no nuanced judgment about the relevance of incidents that might have occurred many years ago, he said.

“We get calls all the time from people with extremely old criminal records,” Kazerounian said. When the assessments are made by algorithms, he said, “There is the effect of excluding people who present no risk.”

In the case of Mikhail Arroyo, CoreLogic overlooked two mitigating factors in assessing his risk: One, his arrest was for a minor theft charge that never was prosecuted. And second, Mikhail could not be reasonably seen as a threat. He was severely injured in a fall in 2015, and the lawsuit says that left him “unable to speak, walk, or care for himself.”

Timothy J. St. George, who defended CoreLogic, did not respond to telephone or email requests for comment Thursday.

CoreLogic declined to provide Arroyo with details of its decision, pressing her to present evidence that she had power of attorney, even though Arroyo was her son’s legal conservator.  She could not provide the forms CoreLogic requested, because his disability left him unable to sign his name.

ArtSpace relented in June 2017 after the Connecticut Fair Housing Center filed an administrative appeal.

The center is seeking to recover damages for the the time and effort expended on Arroyo’s behalf. Bryant, the federal trial judge, concluded this week that the center had legal standing to sue on behalf of itself and Arroyo.

 The suit claims that CoreLogic is guilty of racial discrimination because of its improper reliance on criminal records — and that has a disparate impact on black and Latino applicants, according to a guidance notice published by the U.S. Department of Housing and Urban Development.

“The Guidance noted that ‘criminal history-based restrictions on access to housing are likely disproportionately to burden African Americans and Hispanics,’” Bryant wrote. “It concluded that ‘a discriminatory effect resulting from a policy or practice that denies housing to anyone with a prior arrest or any kind of criminal conviction cannot be justified, and therefore such a practice would violate the Fair Housing Act.’ ”

Bryant also rejected CoreLogic’s motion to dismiss the lawsuit on the grounds it is a provider of criminal records, not housing. She said it failed to cite an authority to “support the notion that the FHA applies exclusively to housing providers.”

“Allowing a screening company to facilitate discrimination by disqualifying qualified applicants on an impermissible basis or by allowing a customer to set impermissible qualification standards with impunity would subvert the purpose of the FHA. Defendants advocate for a constrained reading. Interpreting the law in the manner proposed by the Defendant is too restrictive a reading of the Fair Housing Act,” she wrote.