Page 19 - John Hundley 2010

Sharp Thinking

No. 37 Perspectives on Developments in the Law from The Sharp Law Firm, P.C. September 2010
Negligent Investigation Tags Credit Report

Company With Compensatory, Punitive Damages

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By Sara Crews, 618-242-0246, sara@lotsharp.com
It is assumed that information being provided to a credit reporting agency will be included in the
consumer’s credit report, and therefore relied upon to determine a consumer’s eligibility for credit.
When information is inaccurately reported and/or unable to be verified by the credit reporting agency,
the information provider and the credit reporting agency can be subject to liability under the Fair
Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681 et seq. The FCRA allows the consumer to be
awarded compensatory damages as well as punitive damages for willful violations of the
duties to accurately report information concerning the consumer.
The Third Circuit recently issued such an opinion in Cortez v. Trans Union, LLC, ___ F.3d ___,
2010 WL 3190882 (3d Cir. 2010). In Cortez, Trans Union provided a credit
report to a car dealer where Plaintiff was trying to purchase a car. The report
contained a Trans Union product called “OFAC Advisor” which confused
Plaintiff with a person with a similar name who was on a list compiled by the
U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”).
Federal law severely restricts firms’ ability to extend credit to and do business
with persons on the OFAC list, which is comprised of groups and persons
thought to be linked to terrorists, international narcotics traffickers, and
persons involved in proliferation of weapons of mass destruction. Hence, the
“OFAC Advisor’s” implication that there was a match between Plaintiff
and someone on the OFAC list seriously impacted her ability to buy
goods and services on credit. Crews

Unfortunately for Trans Union, despite (1) repeated requests by Plaintiff that the information be
corrected, and (2) the fact that Trans Union was in possession of personal information which made it
simple to discern that Plaintiff was not in fact the person on the OFAC list, Trans Union failed to
correct the information on the report. This ultimately resulted in a $50,000 award for compen-
satory damages and $100,000 for punitive damages.
One of the claims at issue in Cortez was brought under FCRA § 1681e(b). The court said that
negligent noncompliance with § 1681e(b) “consists of the following four elements: ‘(1) inaccurate
information was included in a consumer’s credit report; (2) the inaccuracy was due to defendant’s
failure to follow reasonable procedures to assure maximum possible accuracy; (3) the consumer
suffered injury; and (4) the consumer’s injury was caused by the inclusion of the inaccurate entry.’

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Sara Crews is a paralegal working in the commercial litigation practice at The Sharp Law Firm, P.C. She was assisted
on this article by Sharp Thinking editor John Hundley.

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Sharp Thinking is an occasional newsletter of The Sharp Law Firm, P.C. addressing developments in the law which may be of interest. Nothing contained in Sharp
Thinking shall be construed to create an attorney-client relation where none previously has existed, nor with respect to any particular matter. The perspectives herein
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