The Outsourced Gatekeepers
A background screening provider is a specialized, third-party company that real estate agencies and large landlords hire to conduct and automate the tenant screening process. Instead of manually collecting and verifying documents, the landlord outsources this critical task to a technology platform. These providers offer a streamlined, digital solution that promises to be faster, more consistent, and more thorough than traditional methods. For the tenant, this means their application is often not being reviewed by a human property manager initially, but is instead being processed by a sophisticated algorithm that checks their data against various databases to generate a 'risk profile'.
How Screening Providers Operate
These B2B companies provide a platform where the prospective tenant is invited to create a profile and upload their required documentation directly. The provider's system then automatically performs a series of checks, which can include:
- Identity Verification: Using digital tools to confirm that an ID document is authentic.
- Credit Checks: Integrating with credit bureaus like the BKR to pull a credit report.
- Income Verification: Using advanced optical character recognition (OCR) to extract data from salary slips and employment contracts to verify income.
- Public Records and Sanctions Lists: Scanning public databases and international sanctions lists for red flags.
Once all the checks are complete, the provider typically generates a consolidated report for the landlord. This report may include a 'risk score' or a simple 'pass/fail' recommendation, which the landlord then uses to make their final decision. This automates and standardizes the process, especially for agencies handling hundreds of applications.
The Problem of Algorithmic Judgment
While this process is efficient, it introduces a significant layer of opacity and automation into a life-changing decision. The tenant has no direct contact with the screening provider and has little to no insight into how their algorithm works. This raises several concerns:
- Errors and Inaccuracies: An error in a database or a mistake by the OCR in reading a document could lead to an unfair negative assessment. Correcting these errors can be a difficult and bureaucratic process.
- Lack of Nuance: Algorithms are not good at understanding context. A complex income situation (e.g., a freelancer with fluctuating revenue) or a past credit issue that has a reasonable explanation might be automatically flagged as high-risk by the system, with no opportunity for the applicant to explain.
- Data Privacy: The tenant is required to upload their most sensitive personal and financial documents to yet another third-party platform, increasing the number of entities that hold their data and expanding the potential risk of a data breach.
Under the AVG/GDPR, tenants have the right to access the data held by these providers and to request the correction of any inaccurate information. However, exercising these rights in the middle of a time-sensitive application process can be challenging.
