Winter 2003-02 Consumers may sue provider of incorrect information to credit reporting agency

Number 50
Winter 2003

U.S. District Court

Consumers may sue provider of incorrect information to credit reporting agency

The Fair Credit Reporting Act allows a consumer to file suit for damages against someone who provides incorrect credit information to a credit reporting agency. Vazquez García v. Trans Union de Puerto Rico, 222 F. Supp. 2d 150 (D.P.R. 2002).

The facts

In 1999 José Vazquez García received a telephone call advising him that he was overdue in the payment of his Sears Charge Credit Card. The problem was that Vazquez did not have a Sears Charge Credit Card. Someone had applied and obtained one using Vazquez’s identity. That someone turned out to be a resident of the illustrious State of Nevada.

Vazquez recognized that and other errata in his credit report by Trans Union de Puerto Rico, Inc. He requested Trans Union to investigate and issue an updated report. Trans Union did, but the update still showed the outstanding Sears debt. A second revision suffered the same fate.

As a consequence of the above, Vazquez was turned down in several applications for credit cards (including one from Sears itself!), all because of his rotten credit history. Vazquez then sued both Sears and Trans Union.

Who is liable?

The main goal of the Fair Credit Reporting Act is to protect consumers from inaccurate credit information found in their credit history reports. Prior to 1996, courts generally held that only the credit reporting agency and the user of a credit report were liable under the law-but not an entity that furnished the erroneous information to the credit reporting agency. Congress amended the FCRA to “provide new tools to insure that furnishers of information to consumer reporting agencies cooperate in maximizing the goal of the [FCRA] that only accurate and complete information is included in credit reports.”

The amendment imposes on furnishers of information the duty to investigate and correct inaccurate data, upon notice of a dispute by a consumer. It also affords a private right of action for the consumer against any person, including furnishers of information, for willful or negligent noncompliance with the law’s mandates.

Said the District Court, referring to Sears: “The furnisher’s failure to comply with these requirements subjects it to liability for statutory and actual damages, as well as the prevailing consumer’s costs and attorney’s fees.”

© 2003 Goldman Antonetti