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On Nov. 20, Mary Louis, a Black woman, was awarded a whopping $2.2 million settlement in her lawsuit against SafeRent Solutions, a third-party service that provides resident screening and applicant risk scores to landlords and property managers, according to the company’s website. The lawsuit stemmed from Louis being denied an apartment in Massachusetts in 2021 despite her excitement about moving into a brand new home. According to the Associated Press, she was disheartened to receive an email from SafeRent stating that her application had been rejected.
The core of Louis’s lawsuit was centered on SafeRent’s use of an algorithm to assess rental applicants, which she claimed discriminated against her based on her race and income. The suit alleged that the algorithm failed to account for the benefits of housing vouchers, a crucial factor in determining a renter’s ability to pay. Mary Louis argued that this oversight unfairly disadvantaged low-income applicants who rely on these vouchers.
Additionally, the lawsuit accused SafeRent’s algorithm of placing too much weight on credit information, which it said provided an incomplete picture of an applicant’s ability to pay rent on time. The suit further contended that the system disproportionately penalized Black and Hispanic applicants, as they often have lower median credit scores due to longstanding historical inequities, thus making it harder for them to secure housing.
SafeRent has agreed to revise certain provisions within its AI algorithm and screening tools that were accused of discrimination in the lawsuit. However, the settlement does not include any admission of wrongdoing. In a statement, the company asserted that while it remains “confident” that the SRS Scores “comply” with all relevant laws, it acknowledged that litigation is both time-consuming and costly.
AI algorithms have long had a disproportionate impact on Black communities.
A 2021 study from the University of California, Berkeley, revealed that an AI-based mortgage system consistently charged Black and Latinx borrowers higher interest rates than their white counterparts for identical loans. In 2023, the Los Angeles Homeless Services Authority faced accusations of using an algorithmic scoring system that resulted in Black and Latinx individuals experiencing homelessness receiving lower priority scores for assistance.
Todd Kaplan, one of Louis’ attorneys, expressed hope that his client’s significant victory would send a clear message to mortgage companies, highlighting the need for changes to their algorithms.
“Management companies and landlords need to know that they’re now on notice, that these systems that they are assuming are reliable and good are going to be challenged,” Kaplan told the Associated Press.
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