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Philbin v. Trans Union Corp., 101 F.3d 957, 963 (3d Cir. 1996).”

The court further noted that “[t]here are, of course, inherent dangers in including any information in
a credit report that a credit reporting agency cannot confirm is related to a
particular consumer. Such information is nearly always ‘used or expected to
be used or collected in whole or in part for the purpose of serving as a factor
in establishing the consumer’s eligibility for…credit.’ 15 U.S.C. § 1681a(d)(1).”
However, “[a]llowing a credit agency to include misleading information
as cavalierly as Trans Union did here negates the protections Congress
was trying to afford consumers and lending institutions involved in
credit transactions when it enacted the FCRA”, it said.

Another issue in the case was Trans Union’s alleged failure to disclose to
Plaintiff upon request all the information in its file, as required by FCRA §
1681g. Trans Union argued it had not violated that provision because it
purchased the offending information from a third party under a contract. The
court said “We do not believe that Congress intended to allow credit reporting
companies to escape the disclosure requirement ... by simply contracting with
a third party to store and maintain information that would otherwise clearly be
part of the consumer’s file”. It defined the consumer’s “file” for disclosure
purposes as “all information on the consumer that is recorded and retained by
a consumer reporting agency that might be furnished, or has been furnished,
in a consumer report on that consumer”, even if recorded or retained for the reporter by a third party.

A couple of observations may be offered regarding this decision.
First, in Cortez the Third Circuit repeatedly references the consumer
protection objectives of the FCRA. Thus, for example, on the issue of damages
the court states that the FCRA “is legislation designed to facilitate banking and
the extension of credit while protecting consumers from the kind of injury that will
almost certainly result when erroneous information is inserted into a credit report.
Thus, damages for violations of the FCRA allow recovery for humiliation and
embarrassment or mental distress even if the plaintiff has suffered no out-of-
pocket losses.” While many courts would agree with the Third Circuit on that
point, it is not clear that the Seventh Circuit would. See, e.g., Aiello v. Providian
Fin. Corp., 239 F.3d 876 (7th Cir. 2001).

Second, in Cortez, the ultimate responsibility and liability were that of Trans Union, the agency
issuing the report. However, the Third Circuit reiterated Congress’ intent to protect consumers when
enforcing FCRA on liability issues also. Providers of information to the reporting agency also are
within the statute’s scope, so businesses should be certain that the information that is being provided
to third party credit reporting agencies is accurate and readily verifiable should a dispute concerning a
credit report arise.

John\SharpThinking\#37.doc
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