NEWS

Credit Reporting Agencies Responsible for Watch List Errors

By Teresa Anderson

A federal appeals court has ruled that a credit reporting agency can be held responsible for correcting errors on credit reports that originated from government watch lists.

In the case, Sandra Cortez sued TransUnion after it reported that her name had appeared on a watch list compiled by the Treasury Department’s Office of Foreign Assets Control (OFAC). The OFAC list collects names of individuals thought to be terrorists, international drug traffickers, and weapons of mass destruction proliferators. Cortez was erroneously listed on the OFAC report because her name was similar to that of a known Colombian drug dealer.

Cortez was denied a car loan because of the OFAC listing, which appeared on her TransUnion credit report. Over the course of the next year, Cortez attempted to correct the report through TransUnion and through the Treasury Department. When Cortez requested a copy of her credit report, the OFAC information was not listed. However, despite numerous calls and written requests, the OFAC information still appeared on the report given when Cortez tried to rent an apartment.

Cortez sued Trans Union under the Fair Credit Reporting Act alleging that the credit reporting agency was negligent in failing to correct her credit report. A jury found in favor of Cortez, concluding that TransUnion willfully failed to investigate the claims of an inaccurate report or note that the issue was under dispute. The jury awarded Cortez $50,000 in actual damages and $750,000 in punitive damages. TransUnion appealed the decision.

The U.S. District Court for the Eastern District of Pennsylvania upheld the jury verdict and the actual damages but reduced the punitive damages to $150,000.

Comments

Credit reports are

Credit reports are constantly updated with new information; most banks report new customer data every 30 days. It is voluntary for banks and creditors report to the credit bureaus. They are utilized to authenticate all information given during the application, most importantly, the amount of unsettled debt and specific number of creditors. Because majority of the applicants usually forget and overlook all exact details, discrepancies in storing information may occur.
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