So if you require a security deposit and the applicant doesn't pay it, do you still sign the lease and turn over your rental to them? No, you stop going forward with signing the lease. The landlord should not have proceeded to run a credit report if a payment was required. The fact that she decided to pay for it and run the credit report was a bad decision on her part. It left her open to a FCRA complaint, if investigated, would find that the landlord violated her own policy and 'willfully' violated the law. But that said, she needs to hold on to the signed application just in case any problem pops up. The applicant has two years to file a complaint and that signed application should be enough present a defense.
Maybe nothing will come of it, but still one never knows?
She did state "He signed the rental application where mention the credit report fee". So the applicant can claim that without the fee, the landlord would/should not run the report.