On May 2, 2024, the Department of Housing & Urban Development (HUD) released two guidance documents addressing the application of the Fair Housing Act (FHA) to two areas in which the use of artificial intelligence (AI) poses particular concerns: the tenant screening process and its application to the advertising of housing opportunities through online platforms that use targeted ads. This guidance follows an Executive Order from President Biden that required HUD to provide guidance to combat discrimination enabled by algorithmic tools used to make leasing decisions.
This guidance clearly states that the FHA applies to tenant screening and housing advertising, including when AI performs these functions.
The tenant screening guidance describes fair housing issues created by tenant screening practices, including the increasing use of third-party screening companies to aid tenant screening decisions and the emerging use of machine learning and AI. The guidance also suggests best practices for fair, transparent, non-discriminatory tenant screening policies for housing providers and companies offering tenant screening services.
Housing providers and tenant screening companies are crucial in ensuring that tenant screenings are transparent, accurate, and fair. The tenant screening guidance underscores that the use of third-party screening companies, including those that use AI or other advanced technologies, must comply with the FHA. It also emphasizes the importance of ensuring that all housing applicants are given an equal opportunity to be evaluated on merit, making you feel responsible and accountable for fair practices.
Advertisers and online platforms should be acutely aware of the risks of deploying targeted advertisement tools for ads covered by the FHA. Violations of the Act can occur when certain ad targeting and delivery functions unlawfully deny consumers information about housing opportunities based on their protected characteristics. Similarly, violations can occur when ad targeting and delivery functions are used, based on protected characteristics, to target vulnerable consumers for predatory products or services, display content that could discourage or deter potential consumers, or charge different amounts for delivered advertisements. This highlights the need for caution and strict adherence to the FHA.
Owners and managers using third-party screening services for applicant selection should carefully review this new HUD guidance. I will provide future articles analyzing both the screening guidance and the use of online platforms.