From Privacy Times, August 3, 2006

FEDERAL JURY AWARDS $351,000 AGAINST EQUIFAX UNDER FCRA

A federal jury in Alexandria July 14th awarded $351,000 to an identity theft victim who sued Equifax over credit report errors that persisted nearly two years after she had placed a “fraud alert” on her Equifax report. It was the largest known Fair Credit Reporting Act (FCRA) verdict against Equifax.

Following a three-day trial and more than one day of deliberation, the jury awarded Suzanne Sloane $106,000 in economic damages and $245,000 in emotional distress damages. The jury found that Equifax negligently failed to “follow reasonable procedures” to achieve “maximum possible accuracy,” failed to conduct a reasonable investigation, failed to delete information it found to be inaccurate, and reinserted information into Mrs. Sloane’s file that previously had been disputed and deleted.

However, the jury declined to award punitive damages, finding that Equifax’s conduct was not “willful” as defined by the FCRA.

Shovana Sloan, who worked at the hospital where Mrs. Sloane gave birth to her second
child, stole Mrs. Sloane’s name and Social Security number (SSN). In the summer of 2003, Shovana successfully obtained credit in Mrs. Sloane’s name with several companies. When Mrs. Sloane discovered the theft in February 2004, she called Equifax, Experian and Trans Union, and placed “fraud alerts” on her credit reports.

A year later, however, she learned her credit report was marred with numerous late payments and “charge-offs,” which sent her once pristine credit score of 750 tumbling to the below-subprime level of 560. Mrs. Sloane and her husband, Tracy, both public school teachers, were in the midst of trying to purchase investment properties in West Virginia. This sub-par credit score interfered with their efforts.

After a March 2005 dispute, Equifax deleted about 22 out of the 24 disputed items. However, CitiFinancial, which was a defendant in the case, but settled before trial, “verified” that two of the fraudulent accounts belonged to the real Mrs. Sloane. Around that time, the conflicting data caused Equifax to create multiple files. A follow up dispute in May resulted in CitiFinancial “verifying” the information a second time. Equifax simply accepted CitiFinancial’s position and did not investigate further.

When the Sloanes’ applied for credit with Wachovia in August 2005, the bank received multiple Equifax files for Mrs. Sloane, both of which were smattered with charge-offs and late payments. Moreover, accounts that were previously deleted had been reinserted. The errors were still there in November 2005 when Mrs. Sloane applied for credit again.

A. Hugo Blankingship, III, Mrs. Sloane’s attorney, argued that Equifax’s procedures were so faulty, particularly in light of the history of identity theft and its impact on credit report accuracy, that Equifax’s conduct amounted to “a conscious disregard” of Mrs. Sloane’s rights, entitling her to punitive damages. (Evan Hendricks was an expert for Mrs. Sloane.) Mara McRae, the Kilpatrick and Stockton attorney representing Equifax, said the credit bureau’s systems and procedures were good overall, but that employee mistakes had resulted in the errors on Mrs. Sloane’s credit reports.

Neither side had indicated whether it would appeal the verdict to the U.S. Court of Appeals for the Fourth Circuit in Richmond. Equifax filed a motion asking Judge Leonie Brinkema to vacate the jury’s award for lack of evidence and other reasons. McRae had no further comment.