Tenants Target Rent Blacklist

(CBS)  In the two years it took the Miller family to find their apartment in San Diego, they had to live with family and in a hotel – not because they didn't have money, but because they had been blacklisted as high risk for eviction.

"I said I was never evicted. What is this? There was no money damages. There's nothing," said Thomas Miller.

CBS News Correspondent Vince Gonzales reports the confusion came from an attempted eviction from an old landlord, a misunderstanding that was quickly dropped. But the damage was done

"I was labeled for no reason," Miller said.

His eviction dispute went into a database landlords use to screen tenants.

"The domino effect was I couldn't get rent, no one would rent to me. My family, we didn't have a place to live," Miller said.

Now a group of renters is suing that national database, U.D. Registry, a company they say provided information that made them homeless by giving landlords incomplete, inaccurate and misleading information.

Critics say even when cases are groundless or tenants win, the incidents show up as a black mark against them.

"So landlords just use these screening services as an easy way to reject a number of people. And they don't want to spend the time to find out whether they're properly rejecting them or not," says David Pallack of Neighborhood Legal Services.

But landlords say they need to protect their investment.

"In order to determine if they have the economics to pay, you have to look at their credit history, tenant history. You have to look at past landlords," says Nancy Ahlswede of the Apartment Association of California Southern Cities.

In a statement, U.D. Registry says: "This is classic case of shooting the messenger. The Millers cannot erase the indelible fact that they were previously sued for not paying their rent. U.D. Registry's report of that fact fully complies with the law."

But Thomas Miller says, "I am just a married man trying to raise my family and give them a place to live and a place to play."

The apartment Miller finally found is still not big enough for his family, but he's too scared to move, afraid other landlords will go by the blacklist and leave them without a home once again.