Regulators in four states are considering taking action after an ABC investigation into real estate websites that pressure rental applicants to pay for their own background checks.
The ABC confirmed at least 160 real estate agencies have used the 2Apply platform to process applications for more than 1,700 properties across every Australian capital city and most major regional centres.
2Apply urges rental applicants to "stand out from the pack" by paying for their own background checks.
Tenants can decline to pay, but their rating is capped at four out of five stars, and they must tick a box that says: "No thanks, I don't want to verify my identity."
The platform also requires extensive personal information, such as the name, age and gender of tenants' children, whether or not they are receiving child support, and the make, model and registration of their vehicle.
Other rental application platforms — including realestate.com.au and Snug.com — are also charging a fee for a background check against data company Equifax's National Tenancy Database.
University of New South Wales tenancy law expert Chris Martin said receiving payment from prospective tenants as part of rental applications could be illegal in several jurisdictions.
"There's a good argument, I think, that that's unlawful under the rules in Tasmania, New South Wales, South Australia and Western Australia," Dr Martin said.
Regulators in four states considering issue
Now, government regulators in each of those states have confirmed they are examining the issue.
Western Australia's Commissioner for Consumer Protection, Gary Newcombe, confirmed his office would investigate whether any laws have been broken.
"Consumer Protection in Western Australia is aware of a number of online services that are being offered to real estate agents in relation to tenancy," he said.
"We are examining this specific example (2Apply), and others, to determine if there are any legislative breaches.
"We will also consider whether any amendments to Western Australia's Residential Tenancies Act might warrant being recommended to the state government."
Tasmania's tenancy legislation outlaws receiving money from a prospective tenant for the purpose of making an application to rent a residential property.
In a letter to the Tenants' Union of Tasmania yesterday, Residential Tenancy Commissioner Narelle Butt said she was concerned by the issues outlined in the ABC's story.
A Department of Justice spokesperson told the ABC: "The commissioner will consider this matter on the basis of the information provided and action as appropriate.
"Anyone with further information is encouraged to contact the commissioner via email to rtc@justice.tas.gov.au so it can properly be investigated," the spokesperson said.
A spokesperson for South Australia's Consumer and Business Services regulator, said the agency was "considering this matter to determine whether any action should be taken".
The ABC also understands NSW Fair Trading is reviewing the issue.
The software group behind 2Apply, Inspect Real Estate, and News Corporation's REA Group — which owns realestate.com.au, Snug, and Equifax — all said the payments they received for background checks complied with all relevant laws, stressing that tenants had a choice about whether or not to pay for their background checks.
Dr Martin said receiving the payments could be illegal, despite tenants having the option not to pay.
"The law in those four states says a person shall not receive [payment], so it's not a defence to that to say that you haven't required it," he said.
"The proscription covers receiving as well as requiring."
