Landlord service Naborly makes blacklist of tenants who missed 4/1 rent (YC '18)
qpbriefing.com
qpbriefing.com
Edit: Their Privacy Policy says nothing about California, and it looks like they're most likely already in violation of California's CCPA.
Edit 2: Can't find them registered anywhere in the US as a credit reporting agency. I guess YC is now funding companies flagrantly violating US law.
For examples of flagrantly violating US law amongst YC's prides and joy [0], consider examining DoorDash [1] or Airbnb [2].
[0] https://www.ycombinator.com/topcompanies/
[1] https://en.wikipedia.org/wiki/DoorDash#Criticism_and_lawsuit...
This is actually dumb in terms of ML, and really dumb in terms of discrimination.
Given someone missed rent April 1st 2020, what does that tell you going forward about their future? Does it imply they're likely to miss rent again someday? Far less than the same data point any other time before. So it's not useful that way. So why get these data points about people?
Perhaps what it does imply is that they may have poor health? Or a disability? Or that they don't have a university degree? Or (data still coming as to this relationship) that they are more likely to be a specific race?
I feel that what these folks are really doing is trying to have their model learn to predict "won't pay rent" based on a data point that implies all the things they're not allowed to train their model to predict with due to obvious discrimination laws.
Edit 5 minutes later: It could be innocent stupidity too. Hanlon's razor is important.
I'd be pretty surprised if making rent in April was really at the 90th percentile, though.
Is it wrong for AI to have the same biases as the general population?
I agree this seems like bad ML. Why assign so much weight to a once a century event?
in the case of landlords, it's tantalizing to pay a few bucks and get some comfort that you've done your due diligence, rather than facing the uncomfortable reality and esteem hit that there is no certainty predicting future behavior. and renters pay for that ignorance and moral hazard.
They're going to use black-swan events for their training data - which is complete nonsense.
Their training sets will be full of false-negatives (good renters that can't make rent. I.e, people with long history of being able to pay rent, but suddenly can't make rent b/c extraordinary events)
Interestingly, they asked about my tenants' payment on April 1st, not even taking into account grace periods or such.
Also, I never signed up to receive their emails, and I've expressly asked them to stop emailing me.
But if I get their report, it will just say "high risk" but won't tell me why, and I'll have no way of knowing it was because of missing rent in April.
AI seems to be like Javascript. It can be used for good, or it can be used for evil. And for some reason the evil uses are always out in front.
We need to fix people so they don't think this sort of thing is OK.
It is used to make money. Evil seems to pay better these days.
You don't fix people, you fix incentives. This requires regulation to prohibit bad behavior and reward for good behaviors.
Edit: I now realize you said "most". You would not lose the wager.
Pretty sure that they run afoul of a few provisions in the FCRA. That they claim to "keep reporting fully confidential and DO NOT notify your tenant that you have reported to our system." seems really fishy to me. If a landlord makes an adverse decision based on information in their system, the person being screened has a legal right to view that information and dispute it.
As it relates to the financial troubles people are going through right now, while failing to pay April 1 rent is a data point, I think the uniqueness of the situation we're in will prove it not to be a particularly useful data point for landlords going forward.
Any landlord that overweights that in their decision-making around who to rent to is probably doing so to their own longterm detriment.
This means that trying to single out the people who were able to pay during this epidemic - by simply filtering out anyone who didn't - can be a 'winning' strategy. Or at worst, a non losing one.
Oh crap... Equifax... nevermind.
And credit agencies need to register with the government and are subject to a bunch of laws. The consumer also needs to give consent for a credit check.
On the other hand, if it isn't acting as a consumer reporting agency, then Naborly's operation seems like it should be strictly illegal:
"The process has also raised concerns from the Canadian Civil Liberties Association (CCLA), which noted that property managers in Canada are not allowed to publish "bad tenants" lists."
> "Any landlord that overweights that in their decision-making around who to rent to is probably doing so to their own longterm detriment."
On the other hand, as in technical hiring, it is probably better to miss 10 good tenants rather than rent to one bad one. Right?
Sure, if there is a shortage of housing and surplus of potential tenants. But in areas where there is a surplus of housing, it might be better than fill a unit with a tenant who has a 15% chance of not being able to pay rent (but who is otherwise a good tenant) than leaving the unit vacant for a year.
That's nowhere near the worst-case "bad tenant". The worst-case scenario takes months to evict and leaves behind tens of thousands of dollars of property damage. There might even be some personal harassment thrown in just for good measure. Avoiding such a tenant is absolutely worth missing some opportunities to fill the property with a paying tenant.
Not that missing rent this April 1 is likely to tell you much about that particular risk.
Tenants do not have that transparency with this report. Heck, they don't even know if they are in the system!
And then, Cheesecake Factory announced it would not pay April 1 rent on any of its locations.
The economic fallout of this situation is something we will all bear the brunt of. Landlords are not shielded from it. I'm not saying everyone should stop paying rent, but the fact of the matter is, if people and businesses are not making money for months on end, many of them will have no choice but to stop paying.
It is unconscionable that someone thought to turn this into a blacklist which many of the unlucky millions who have recently lost their jobs will end up on.
Landlords are in a slightly different boat than say the restaurant down the street. The restaurant isn't forced to provide services to anyone if they aren't getting paid, most places right now have basically blocked evictions (which is a good thing) and forcing landlords to keep people in place regardless if they get paid or not.
Many are turning this into a protest against rent and even if they have the means to pay are organizing rent strikes ... this is going to bite people in the butt this summer / fall when we are out of this mess.
My not so informed opinion is that once states of emergency are lifted if you didn't pay your rent your landlord can take you to the arbitration board in your area ... if you can prove you were out of work then you get X months to pay back your back rent (where X maybe equals 2x the number of months you missed rent) and if you can't prove you were out of work you have 30 days to pay your back rent or your out.
Additionally, you cannot be evicted for lack of payment during the emergency. After is less clear.
Eviction proceedings require 3 months notice now. That's not as good as it sounds: It was already 2 months normally.
Notice can still be given. If you miss rent on 1st April and then the grace period passes (which is not long), they can send you notice of eviction proceedings that will start in 3 months.
So you can't be removed from your rented home for 3 months, but you can lose your right to continue renting there in 3 months, caused by events happening right now.
I don't think they can evict due to lack of payment in the emergency. Which is just as well, because the notice period for non-payment eviction proceedings is quite short.
However, landlords have the right to give no-reason eviction notices to most tenants anyway (I think it's mostly tenants who've been there for > 6 months). They don't need to give a reason, they just have to feel like it.
The notice period for that is now 3 months instead of the former 2 months...
Restaurants make food, landlords don't do anything.
They pay the mortgage on the property, arrange (or do themselves) upkeep on the property, collect money, etc. We can argue if that's really worth anything, but they don't do nothing.
In fact - If anything, landlords should buckle up and brace for the worst. Trying to get someone evicted right now isn't going to do sh!t. You'll spend MONTHS on the process, with probably no good replacement.
No, the best thing to do right now is to contact your tenants and bank(if they own your unit), and work out a plan that works for all parties. You're both deep in it, and there are no good ways out for the next 3-4 months, only the least terrible.
And I absolutely understand the frustration of fresh landlords that are mortgaged to their necks with their (maybe) only rental, but that's unfortunately how life is. Good times and bad times.
Transparency again. And again. Companies need to be forced to disclose the column names in their DBs and justify publicly why they are keeping each piece of data.
Something easily searchable and integrated into mainstream property search sites would be great.
"[ ] Hide landlords and agents with many bad reviews from verified tenants, verified history of no-fault evictions, official complaints and government sanctions."
But it won't happen as long as it's the landlords who pay for the searchable listing.
Brutal. They know how it looks, they just don't care to be seen being that guy.
Just because you can doesn't mean you should
As we have seen with their data breaches, they have no shame, and operating in a black box under the shield of "trade secrets" lets them do any slimy thing they want.
PR might bring down a small company like Naborly, but Experian and the others are bulletproof.
> (these companies) have no shame
Companies have no morals. People have morals. Thus reframing 'BigCorp is bad' trope.
It's much easier, common, and not incorrect to say, "Company A does bad things" rather than "An important subset of the people at the head of Company A have enacted policies that caused bad things to happen."
If I put on my 'if I where an investor' hat...any CEO who would post a YouTube video basically asking for this data seems right now seems like so tone deaf action that I wouldn't want them making strategic decisions because they are so short term focused.
The blowback could just as easily include new regulation
Publicly trying to create that specific aspect in isolation seems to be a big misstep, though they'd probably have a better chance with it legally in the US than Canada.
>COVID-19 Notice: Until further notice, the LTB is suspending the issuance of eviction orders and all hearings related to eviction applications — unless the matter relates to an urgent issue such as an illegal act or serious impairment of safety.
that said those that can pay their rent SHOULD BE, because I imagine one of the critera for having the LTB rule in your favour is showing you were in a hardship at the time.
- didn't pay rent
- late paying rent at least three times
- your family is planning to occupy the unit
- unit is uninhabitable
- major damage to property
- broke the terms of the lease
Family occupancy is the most common workaround that landlords use, and it takes a long time to make it happen. Followed by "renoviction" (leaving the unit in disrepair until they can force the tenant out for construction). That is also expensive and takes a long time. In any case, there has to be a reason.
There's a maximum you can push people until it springs back into your face.
> what justifies them getting paid simply for owning more of a thing (housing) than they can personally use?
... Because they own it, and let others use it for a fee.
Let me just ask straight up: Do you believe that private property should not exist?
Absolutely, that would be an ideal. However, don't make the mistake of conflating private property and personal property. A primary residence would be personal property, as would a car, etc.
As for the other "services" you mention, if the housing market weren't distorted by people thinking housing needs to be an inflating asset, most of those problems could solve themselves in a market scenario.
Commercial property developers should not exist, and any housing needs should be met presumably by government construction?
> if the housing market weren't distorted by people thinking housing needs to be an inflating asset, most of those problems could solve themselves in a market scenario.
I agree that overly restrictive zoning and planning regulations, IMO largely driven by owners' considerations of property values, distort the housing market by restricting new supply and inflating prices across the board.
The problem is the local government in these cases is being misused to prevent the proper functioning of the market.
The solution is not to get rid of private property--dude, it's 2020, and communism is still a failure--it's to reduce the local governments' ability to interfere with the market.
Why do you need to own those things? If anything, capitalism has come around to this idea with the "sharing economy," and it works.
Do you not think those facilities can be provided for the common use of all who have a need or desire to use them? Why do you feel you should be entitled to exclusive rights to hunt that land, or enjoy the lake shoreline? More importantly, why do you feel you should be able to deny others use of that land?
Is there nothing else more useful you can think of to do with that money?
> Commercial property developers should not exist, and any housing needs should be met presumably by government construction?
That's one way to go about it. As long as builders are adequately compensated for their labor, does it matter?
> I agree that overly restrictive zoning and planning regulations, IMO largely driven by owners' considerations of property values, distort the housing market by restricting new supply and inflating prices across the board.
Explain Houston, then. The housing market in Houston still inflates at a rate higher than the general rate of inflation, and yet, there is literally no zoning there [0].
> The problem is the local government in these cases is being misused to prevent the proper functioning of the market.
Correct, because people think just because they put a lot of money into buying a house, that it should be an investment and prices should always go up. Japan provides a decent model of how to do it differently within a market framework: https://archive.is/jNx7X
> The solution is not to get rid of private property--dude, it's 2020, and communism is still a failure--it's to reduce the local governments' ability to interfere with the market.
Where and when have we had communism on a nation-state scale? Cuba arguably comes closest to the ideal, and they're doing well. China and the USSR were really more state capitalism than communism of any sort.
---
Sure, Cuba does well in some important metrics like education and healthcare, but overall it is still an impoverished authoritarian state. Not exactly a communist utopia.
This presents a false dichotomy in my view. If a property is paid for, there's no emergent liability set upon the owner that isn't also set by the state (which grants them absentee property title in the first place). All of the market mechanisms that incentivize transformation, maintenance, and occupation of land can exist without recognizing absentee title as legitimate, enabling people to occupy spaces they don't own without having to pay a rentier in perpetuity.
I mostly agree here, although there is an argument that certain torts against property owners are not really "set by the state" except that they recognize that without official codification and means of redress, mob justice or personal vengeance might proliferate.
> All of the market mechanisms that incentivize transformation, maintenance, and occupation of land can exist without recognizing absentee title as legitimate, enabling people to occupy spaces they don't own without having to pay a rentier in perpetuity.
I'm not clear exactly what you're arguing here: The government could just own all land but allow anyone to build on it and occupy it indefinitely for free? Or nobody can own land they do not reside in?
There are so, so many problems here. How do you resolve disputes between rival claimants to a building? How exactly does one move to a new place-do they sell the house? So they retain ownership of the improvements, but not the land? If there is no formal ownership, how are property taxes assessed? Do they just go away? Are they based only on improvements?
If we can still own improvements, but only one per person and a person must reside on the property to own it, people will still need an improvement to live in, and they will still have to either buy one or rent one, changing nothing. If we can't own improvements we don't live in, well, who will be building new apartments and condos? You will end up with a huge market inefficiency, with lots of low-capital people with demand for housing and lots of capital owners who could theoretically supply that demand by building commercial residential property but will not because they legally cannot own and profit from any construction.
What I am envisioning here is a world where abandoning a property grants rights to the next person to occupy it, rather than allowing the original proprietor to act as a permanent parasitic middleman between maintenance and occupants. In the case of conflict, I would imagine it would carry out similarly to how all disputes get resolved. With a state you can navigate through a legal system, and without one you have market solutions such as Coasian bargaining, social sanction, arbitration, etc. This doesn't mean that someone gets to sleep in your bed if you haven't used it since you woke up, but approaching these kinds of problems require recognizing property as the dynamic and fluid social relationship that it is. How do you deal with a family member eating your leftovers in the fridge?
> If we can't own improvements we don't live in, well, who will be building new apartments and condos? You will end up with a huge market inefficiency, with lots of low-capital people with demand for housing and lots of capital owners who could theoretically supply that demand by building commercial residential property but will not because they legally cannot own and profit from any construction.
I don't buy this. It doesn't follow that eliminating one vector for rent-seeking eliminates all incentive to satisfy demand, as there is still profit to be made from production!
They make money by monopolizing a piece of land, with the backing of the state, and then letting others use that land.
Even capitalists should be against them on the basis of a state backed monopoly alone.
Realtors offer some value in knowing the market, but that's not worth a 3% commission on both sides of the sale, IMO. I already mentioned landlords. Property managers are essentially the same as landlords, except even more useless most of the time.
The only ones that offer anything of real value post-construction, IMO, are those that facilitate sales: title companies, banks, and realtors. Realtors are the worst of them, because they've enshrined their position in law in many states, and, as I mentioned, their commissions are simply way out of proportion with the value they provide in an age when home listings exist on the internet.
They have a problem of it being used as an investment, rather a job.
No one is suggesting that someone putting all the time and effort to get a building built shouldn't get paid for the time they've spent doing that. But that's where that payment stops, when they've gotten paid for the hours they spent working on that.
When housing becomes service AND monopoly, that is where the issue is. Land ownership is problematic, and profiting off of a state backed monopoly is even worse.
People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.
– The Wealth of Nations, Book I, Chapter X.
And the email that was sent after the initial request for data:
>I would appreciate a moment of your time to clarify my team’s efforts to make a positive impact amidst the COVID-19 crisis.
Yesterday, I wrote an email asking landlords to provide information on April rent payments. This information was intended to allow Naborly to better support landlords and tenants and promote a mutual understanding of the severe impact the economic shutdown is having on the rental industry. Upon reflection, I recognize that the email was poorly worded and did not provide sufficient context. I am deeply sorry if it suggested that Naborly or myself were trying to do anything other than help.
Our goal at Naborly is to provide a tenant screening tool that is free from bias, and we are firm believers that housing is a human right. For tenants, we aim to remove traditional barriers to housing such as level of income, student or immigration status, or prior evictions. For landlords, we provide a screening tool that captures a tenant’s entire ability to pay rent, beyond factors such as credit history.
As part of that goal, we have always had a reporting tool that allows landlords to provide feedback, both positive and negative, on their tenants. In light of the COVID-19 crisis, this information is more important than ever. We serve over 800,000 rental units and their owners and are in a unique position to compile information on the hardships facing tenants and landlords alike. Having accurate information allows us to adapt our screening tools to ensure tenants are not unfairly viewed as intentionally delinquent on their rent obligations. Last week, we were grateful to have received survey responses from more than 5000 tenants and 700 landlords on the difficulties the COVID-19 pandemic has created for them, and were able to use that information to promote a constructive dialogue between tenants and landlords. You can read the results of our survey here.
Naborly is and will always be committed to unbiased accuracy, fairness, and equality in our risk assessment. The notion that we are trying to hurt tenants in this time of crisis is against everything we believe in as a team. I am deeply sorry that the way I expressed myself did not reflect who we are as a company and what we are trying to accomplish. It was not my intention.
Our support lines are open to all landlords and tenants to assist in navigating the government programs available to them and to answer any other questions they may have.
Sincerely,
Dylan Lenz
Founder & CEO Naborly Inc.
Otherwise it would be against everybody’s interests.
What is the problem here? Intent? Ah, then the burden of the proof is greater.
But that must mean there's something else like Yelp, but about landlords, for tenants...
Cash Rules Everything Around Me.
I'm throwing a party when these guys go to jail.
If you don't pay your rent, that's fine. Plenty of jurisdictions have suspended rent payments. But that you didn't pay your rent is a true fact. You either did or you didn't. It's part of history. It's a feature of objective reality. You can't stop people from remembering true facts and talking about them. You don't make a better world by suppressing information.
Many jurisdictions where I am have suspended evictions for non-payment of rent, but not the rent payments themselves. Tenants are still liable for the rent and may be liable for additional interest.
In the U.S., it would probably be unconstitutional for a government to just take away all the rents from landlords.
Is such a blacklist actually illegal or did they mistype “immoral”?
This sounds like the initial data collection which is a massive grey area IMO. The use of that data to make an approve/decline decision is where the regulations start to take effect.
No, but you need to give permission for anyone to run a credit check on you. Literally no one can legally see that info without you giving them permission to do so. Whereas anyone can sign up for this service and see info about you.
Edit - also, banks won't give you a bad score as long as you keep paying the minimum on all your credit products. And in my experience, their willingness to give you a mortgage or extend credit has more to do with your income and assets than a credit score.
Whether that is true will depend on your jurisdiction. In the U.S. at least, it is not true. In the U.S., a consumer report needs to be for a permissible purpose, but it does not always require explicit permission of the consumer. See 15 U.S. Code § 1681b, https://www.law.cornell.edu/uscode/text/15/1681b.
There is a level of transparency. It's not perfect but it;s something. This Company is obfuscating every layer, the tenants don't even know it's going on. The biggest issue here with the obfuscation is, Who is keeping the landlords honest?
There are already associations in the US that legally track tenant and landlord issues. This company is just bypassing all the regulations involved in that and pretending it's ok.
Whoever ends up moving into that place must have given the reference. So it's not optional, right?
It's the same "opt out" as opting out of paying $30K for that SUV at the car dealership. Oh, and not driving out with it either; that's done by the next buyer who coughs up $30K.
If it legal to ask for a reference, it means that, in the eyes of the law, the situation would be acceptable if every landlord in the country required one. In such a case it would still optional in the sense that one can emigrate, or go sleep on some friend's or family member's sofa.
The point is that people who don't want to give the reference will do so anyway because the circumstances force them to.
How is that relevant? Consumers don't have a choice in the matter; consent is mandatory because a place to live is a fundamental need.
Nobody gives consent for the data to be collected.
Then when you need a place to live, you have no choice but to agree to a background check using that data because virtually all landlords require it.
Landlords need tenants more than tenants need landlords. At the end of the day, you can always find somewhere to live even if it's shared tenancy or crashing with friends or family, an empty apartment just costs the landlord money.
It's in the next paragraph:
"Ries said Naborly seems to be acting as a consumer reporting agency, of which there are currently two licensed in Ontario: Equifax and TransUnion."
> "It seems like this is a blacklist that Naborly is hoping that landlords will help create by just informing on every single tenant, whether they've paid or not," he added. "It does not seem legal."
> Also, allowing landlords access to tenants' past paying habits meant the company in question was "acting as a credit reporting agency, without a requisite licence," he said.
> The process has also raised concerns from the Canadian Civil Liberties Association (CCLA), which noted that property managers in Canada are not allowed to publish "bad tenants" lists.
How would the lawyers find out if a landlord chose not to rent to someone based on this information?
That's easy. The servers are going to record who accessed the api, what data they retrieved, and when. I wouldnt be surprised if we receive and anonymous data dump soon.