Rent to groan: Sacramento startup makes it easier for landlords to rate tenants

Being named Comstock’s startup of the month began as a victory lap for Renter Inc., a Land Park-based company that allows landlords to rate their tenants online. But more than a week after the web-only article went live September 6, Twitter users debated a question the business magazine didn’t pose: Doesn’t Renter Inc. make it easier for landlords to dodge anti-discrimination policies?

“I can’t fully get my head around all the reasons this is a bad idea - Hsg rights, consumer protection, privacy?” wrote a Twitter user identified as Shamus Roller, who also happens to be the executive director of Housing California, a statewide affordable housing advocacy organization.

Leave it to the internet to turn a business puff piece into a serious exploration of tenant rights.

Billed as “Carfax for landlords,” Renter Inc. lets landlords rate their past tenants and research prospective ones in a database. Founder Vitaliy Merkulov says the service replaces an antiquated system of requesting rental history via fax.

But will his website also make it easier for landlords to discriminate against potential renters based on race, gender or other factors?

The California Department of Fair Employment and Housing recorded 5,096 such complaints last year, nearly 22 percent of which claimed discrimination based on disability and race or ethnicity. Another 588 complaints involved claims of discrimination based on gender or sexual orientation. Retaliation, which involves landlords punishing tenants for filing fair housing complaints, placed a close third.

Merkulov says he discussed anti-discrimination measures with consumer protection and fair housing attorneys and landlords to ensure the legality of his service. He says he’s also collaborating with Experian, a global consumer reporting agency, to strengthen the ID verification security on his site. As a consumer reporting agency itself, Renter Inc. must abide by the Fair Credit Reporting Act.

The Communications Decency Act is also important to consider, according to McGeorge law school professor Michael Mireles, an expert on landlord-tenant law. Mireles says the CDA allows interactive computer service providers like Renters Inc. to shift the legal risk onto their users by placing certain language in their terms of service, which the company does.

Merkulov insists he doesn’t want anyone sued. “If this website is not going to work and it’s going to be a website with a lot of discrimination, landlords won’t use it,” he said. “They won’t want to be sued. It’s in our best interest to make sure it’s as fair as possible.”

In the meantime, who speaks for the tenant?

In 2014, the county pulled the plug on the Regional Human Rights/Fair Housing Commission, which mediated disputes between landlords and tenants for half a century before local governments decided they could no longer fund its existence. There’s still Legal Services of Northern California, which specializes in fighting for tenants’ rights and preserving low-income housing.

Sarah Steinheimer, of LSNC’s Regional Council for Housing, was unaware of Renter Inc. But she pointed to positive reforms from the passage of Assembly Bill 2819, which ensures that all records of a tenant’s eviction remain private unless a landlord prevails within 60 days of suing to evict. Before the law passed, eviction lawsuits were public after 60 days even if the tenant eventually prevailed.

“An eviction filing that may have not been meritorious becomes this stain on a tenant’s credit report” under that model, Steinheimer said. “Landlords use that to deny people into rental housing.”

While AB 2819 protects people from being wrongfully blacklisted, Steinheimer said Renter Inc. “could become a step back in comparison.”

Renter Inc. currently counts six regional landlords as clients. That client list may grow, as the Comstock’s article raised the company’s profile. Merkulov is already planning to expand his market. He says Renter Inc. is developing a service where tenants may create profiles to check their Renter Report for free one time per year. They can also dispute reports posted by previous landlords. Merkulov sees this as both a check to dispute false claims and an opportunity for tenants with bad or no credit, like young people and immigrants, to build a resume and relationships with future landlords. For now, Renter Inc. services are free to all users.

“We know this is going to spark up a lot of questions because it’s very close to privacy,” Merkulov said. “It’s going to spark hatred from the renters because nobody wants to be tracked.”