In a case of first impression, the Third Circuit Court of Appeals affirmed a decision holding a credit reporting agency liable for violations of the Fair Credit Reporting Act (FCRA). In Cortez v. Trans Union, LLC, the reporting agency, Trans Union, provided a product which generates a list compiled by the Treasury Department’s Office of Foreign Assets Control (OFAC) of persons thought to be terrorists, international narcotics traffickers, or involved in the proliferation of weapons of mass destruction. The plaintiff’s identity was apparently mistaken for another person’s, causing Trans Union to report an OFAC “advisor alert” on the plaintiff’s credit report. The Third Circuit rejected Trans Union’s argument that the OFAC alert was not subject to FCRA because it was not part of a consumer report, finding that the argument ignored “the breadth of the language that Congress used in drafting that statute.”

The court upheld the determination that Trans Union negligently failed to assure maximum possible accuracy of its credit report, as required by FCRA, stating that the agency could not simply rely on the Treasury Department’s reporting of information. The court also rejected Trans Union’s contention that the OFAC information was not part of the consumer’s “file” under FCRA, noting that FCRA’s protections apply to all information furnished, or that might be furnished, in a consumer report. It also found that Trans Union failed to carry out its duty to promptly investigate the disputed information, modify or delete information that was inaccurate, incomplete, or that could not be verified, and failed to provide notice of the dispute, continuing to send reports with the misleading information although it knew a dispute was pending. The court said it did not reach its decision lightly, but it could not give “‘a company that traffics in the reputations of ordinary people’ a free pass to ignore the requirements of FCRA each time it creatively incorporates a new piece of personal consumer information in its reports.”