Jury Awards $5.3 Million for Credit Report Errors

An Oregon woman who fought for six years to clear erroneous items from her credit report was awarded $5.3 million Monday by a federal jury in Oregon.

The verdict against Chicago-based credit reporting firm Trans Union was the largest amount ever awarded for violations of the Fair Credit Reporting Act, which requires credit reporting companies to keep accurate records and promptly correct mistakes, consumer attorneys said Tuesday.

“This amount, awarded to one plaintiff, eclipses everything we’ve seen before,” said Andy Henderson, a Los Angeles attorney who has litigated several such suits. “But it’s a continuation of a trend that has been going on since 1996.

“We have seen increasingly large awards against credit reporting agencies--and rightly so. The credit reporting industry has been acting in conscious disregard of the law for years.”

Trans Union is expected to appeal the verdict, but a company spokesman did not return calls seeking comment.

The case was filed two years ago in U.S. District Court in Portland by Judy Thomas, a Klamath Falls real estate broker who discovered that her clean credit history had been marred by the credit problems of another woman with a similar first name and Social Security number.

Thomas had first attempted to clear the inaccurate items in 1996 by contacting Trans Union, said her attorney, Mike Baxter of Portland. Baxter said Trans Union had mixed Thomas’ credit history with that of a woman who lived one state away and whose Social Security number was just one digit off from Thomas’.

Thomas didn’t discover that the inaccuracies were still on her credit report--and showed her credit had gotten even worse--until three years later, when she was in the process of buying a home. Turned down for a mortgage, Thomas learned that her credit report included an “a.k.a.” or “also known as” listing, indicating to potential lenders that she and the other woman were the same person.

According to Baxter, when renewed efforts to get Trans Union to fix the problem were unsuccessful, Thomas contacted the other woman, and persuaded her to write a letter to the credit agency stating that she was not Thomas. The “also known as” remained on Thomas’ credit report until only a few months ago, Baxter said, thwarting Thomas’ efforts to clear her report of credits problems.

“She has not had a clean credit report in six years,” said Baxter, who asked the jury for both compensatory and punitive damages. “We are hoping that this case will make it clear that credit reporting agencies have to follow the law.”

The Fair Credit Reporting Act spells out a procedure for consumers to dispute erroneous items on their credit report--a document used by lenders and insurers to set rates and determine whether to issue new loans and insurance policies. Trans Union is one of three major credit reporting companies that compile such data. The other two are Atlanta-based Equifax and Costa Mesa-based Experian.

The Fair Credit Reporting Act also requires that credit reporting companies investigate disputes and correct or delete the incorrect items within 30 days.

Credit reporting firms typically investigate consumer complaints by sending a form letter to the creditor that reported the disputed item, asking to verify its accuracy. If the creditor does not verify the item within 30 days, the item is dropped. If it’s reinstated later, the credit reporting company is supposed to notify the consumer.

However, Thomas contended in her lawsuit that the procedures Trans Union used to investigate and correct her report only worsened the problem. The agency never wiped out the erroneous “also known as” listing, Baxter said, so its computer-generated form letters gave creditors the impression that Thomas and the other woman were one and the same. The result was that Thomas’ report was never cleared.

Thomas eventually got her mortgage by contacting the creditors directly, providing the correct information about her name, address, Social Security number and stating she wasn’t using any other names or any other addresses.

“It’s a perfect example of what happens to hundreds of thousands of consumers,” attorney Henderson said. “It’s a reflection of the fact that credit reporting systems often don’t have the proper mechanisms in place to correct a problem even after it’s been identified and proven to be inaccurate by the consumer.”