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Volume 22 Number 15, August 5, 2002

(Excerpted From Page 3)



It was a tough couple of weeks for Trans Union, one of the nation's "Big Three" credit bureaus. First, it lost another challenge to the Federal Trade Commission's rules restricting its sale of credit header data under the Gramm-Leach-Bliley Act.

Then, on July 29, a federal jury in Oregon awarded $5.3 million to Judy Thomas, a Klamath Falls woman whose Trans Union credit report was regularly mixed with Judith Upton, a Washington State resident. Upton's Social Security number was only one digit different than Thomas' SSN. That, combined with three common letters in the first name, was sufficient to cause a regular merging of the two women's credit histories. Thomas repeatedly was frustrated in her efforts to get Upton's data off of her credit report. .

It was the biggest award ever under the Fair Credit Reporting Act; $300,000 was in compensatory damages; $5 million was in punitive damages, intended to punish the Chicago-based credit bureau for willfully violating the FCRA.

Trans Union assuredly will appeal the verdict. The largest award previously, $4.4 million against Trans Union, came from a federal jury in Mississippi in 1998. But the verdict was vacated by a three-member panel of the U.S. Court of Appeals for the Fifth Circuit, which ruled that a willful violation of the FCRA required some form of concealment. Other courts have concluded that a willful violation requires either reckless or conscious disregard of the law. The Magistrate Judge in the Oregon case, John Jelderks, adopted the conscious disregard standard in his instructions to the jury.

A key moment in the trial came when one of Thomas' lawyers, Robert Sola, cross-examined Joni Payabyab, the TU manager of consumer disputes. Payabyab testified that TU dispute handlers received training on the FCRA and had to take an exam. But when Sola read to her certain provisions of the FCRA, including ones from the 1996 amendments, Payabyab appeared unfamiliar with them. When asked directly by Sola, she effectively admitted that she was unfamiliar with them.

Sola's litigation partner was Michael Baxter, the lead attorney in the Jorgensen case, which resulted in a $600,000 verdict against TRW. That verdict is the largest FCRA award not to be reduced or vacated. TU was represented by Donald Bradley of Crowell and Moring. (Editor's Note: Evan Hendricks was an expert witness for the plaintiff.)

Back in Washington, the D.C. Circuit's July 16 opinion upheld broad FTC rules effectively barring Trans Union from selling credit header data -- personal information on the top

of the credit report like name, address and Social Security number. The appeals panel concluded that the FTC had broad authority to define such key terms as "financial institution" and "financial information" under the Gramm-Leach-Bliley Act, and that the FTC was entitled to deference.

The FTC rules defined financial information as any data provided by an individual in order to get a financial service. The D.C. Circuit rejected TU's claim that the rules interfered with its First Amendment right of commercial free speech. (TU v. FTC: CA-D.C. -- No. 01-5202; July 16) (

The decision was somewhat of a replay of the D.C. Circuit's opinion in Trans Union I, in which it upheld an FTC enforcement action under the FCRA to stop TU from selling credit report data for non-credit marketing. In June, the U.S. Supreme Court rejected TU's bid to overturn that decision. (see Privacy Times, June 12; Vol. 22 No. 12)

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