Identity Theft

Fourth Circuit to Equifax: FCRA Means What It Says About Stolen & Mishandled Information

Pay up: that’s the Fourth Circuit panel’s bottom line to CRA (credit reporting agency) Equifax in Sloane v. Equifax, No. 06-2044 (Dec. 27, 2007), a Fair Credit Reporting Act (”FCRA”) case decided late last month. You can read the case for yourself here (PDF Format): Sloane v. Equifax decision.

Facts of Sloane Case

Ms. Sloane, the plaintiff, lost a lot during what should have been a joyous time for her and her husband - her hospital stay for the birth of her baby. Instead, a nurse with a similar last name noticed an opportunity, and stole Ms. Sloane’s personal information. Based on that info, the ID thief went on a spree, opening accounts in Ms. Sloane’s name and racking up thousands of dollars in debt — and, of course, not paying it back.

When Ms. Sloane discovered the problem, she did what every ID theft victim is advised to do — report it to the CRAs, get copies of the credit reports, call all the creditors, and keep really good records. While most of the creditors did exactly what they were supposed to do under the law (i.e., not hold her liable for the theft and correct their own internal records), a few didn’t — but most egregious of all was Equifax’s response. Instead of correcting the erroneous info and removing the accounts that weren’t hers, Equifax went so far as to add a contested account back in to her record!

The struggle with Equifax, which is far too detailed to recount verbatim here, dragged on in mind-boggling ways; you really have to read the opinion (which recounts the whole sordid tale) to get the full impact of just how devastating something like this can be to a person. Suffice to say, Ms. Sloane’s marriage was endangered, she suffered horrendous amounts of stress, and the impact on her credit and financial dealings was, predictably, disastrous.

Equifax’s Response

While Equifax wasn’t the only bad actor here (the thief is obviously to blame for the initial loss, and some of the creditors didn’t behave much better, at least initially), its response was pretty jaw-droppingly blase. Reading the opinion, it strikes one that the general attitude was pretty much a yawning “So?”

The legal arguments weren’t much better; the Court observed that Equifax wasn’t really pointing to any authority for its proposition that it shouldn’t have to pay attorney’s fees (even though FCRA specifically calls for fees to be borne by the CRA if it loses, as Equifax did) and that the emotional damages award was too high (picking a far lower number “out of the air,” in the words of Equifax’s own attorney, instead of the one the trial produced after verdict). It simply said, in essence: “Trust us. We can’t tell you why, but we’re right.”

Needless to say, the Court didn’t really buy that argument.

The Bottom Line: ID Theft Hurts. A LOT.

As the court correctly spotted, ID theft’s damages are not a one-time, one-shot thing. They continue on and on, as the injuries mount up day after day.

Nor is there just one injury (i.e., the theft itself). Instead, there’s a fresh new injury anytime the victim’s incorrect credit information is accessed and/or relied upon. Even when there is no immediate denial of credit due to the inaccurate information, victims still suffer from the threat of the harsh consequences.

The lessons to plaintiffs and ID theft victims are threefold, and simple:

1. Know your rights.
2. Never, never, never give up.
3. And keep really good records.

© 2008 SC Bankruptcy & Consumer Law Blog.