July 27, 2023
A Massachusetts federal judge ruled this week that the company behind a tenant screening algorithm that caught the U.S. government’s eye is subject to the Fair Housing Act, rebuffing an attempt by the screening firm and a Boston landlord to duck potential tenants’ racial bias claims.
U.S. District Judge Angel Kelley on Wednesday largely denied bids by SafeRent Solutions LLC and Metropolitan Management Group LLC to escape a proposed class action leveled by housing applicants Mary Louis and Monica Douglas. The pair say the screening company’s so-called “SafeRent Scores,” which are partly based on individuals’ credit history, disproportionately lock Black and Hispanic renters out of housing opportunities.
Siding with the applicants and an amicus brief filed by the federal government, Judge Kelley ruled that the screening firm is subject to the FHA’s ban on racial discrimination in housing. Even though SafeRent itself is not a landlord, Louis and Douglas adequately alleged that property owners relied solely on the company’s decisions to deny prospective renters’ applications, effectively granting it authority to make housing decisions, the judge found.
“While SafeRent delivers ‘an accept/declined/conditional decision’ based on the housing provider’s ‘predetermined decision points,’ those housing providers ‘cannot change the screening algorithm’ and do not know how the SafeRent Score is calculated before selecting its minimum score for applicant approval,” Judge Kelley said in an order. “SafeRent ‘effectively controls the decision to approve or reject a rental application,’ and it ‘has sole control over how scores are calculated.'”
Louis and Douglas filed suit against SafeRent and Metropolitan Management in May 2022. Louis says the landlord denied her application on the sole basis of her SafeRent Score, and later refused to consider her appeal. Douglas argues that a non-party landlord similarly rejected her application using a SafeRent Score, though it later reversed course after she appealed with the help of co-defendant Community Action Agency of Somerville Inc., court filings show.
The algorithmic screening score produced by the company for tenant applications relies in part on renters’ credit scores. But this reliance on credit scores, which includes debts unrelated to prior tenancies, disproportionately harms Black and Hispanic renters who are more likely to have subprime credit scores, the two women told the court.
After determining that SafeRent is subject to the FHA, Judge Kelley concluded that Louis and Douglas’ case adequately alleges that the use of the screening score has a disparate impact on Black and Hispanic renters.
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The renters are represented by Todd S. Kaplan and Nadine Cohen of Greater Boston Legal Services, Christine E. Webber and Samantha N. Gerleman of Cohen Milstein Sellers & Toll PLLC, and Stuart T. Rossman, Charles M. Delbaum and Ariel C. Nelson of the National Consumer Law Center.