Credit Data Firm Faces FTC Charge : Fair trade: Trans Union is accused of illegally selling mailing lists of consumers based on credit ratings. Agency settles with TRW in another case.

The Federal Trade Commission on Tuesday accused Trans Union Corp., one of the nation’s biggest credit-reporting agencies, with illegally selling mailing lists based on consumers’ credit information.

The FTC also reached a settlement with another of the three major credit bureaus--TRW Inc., which maintains its credit operations in Orange County. The TRW settlement also involved the firm’s activities with direct marketers.

The agency said it had made a preliminary finding that Chicago-based Trans Union had violated the federal Fair Credit Reporting Act, which allows such lists to be sold based only on non-credit data, such as address or age.

Under the law, credit data on the 200 million Americans who have applied for loans or jobs can be provided only for uses that include approval of an application for credit or a job.

The FTC, which monitors fair trade practices by U.S. companies, noted that the allegation against Trans Union simply meant it had “reason to believe” the law had been broken, and that the issue would be taken up at a formal hearing.

Separately, the FTC filed a proposed settlement with TRW, another of the big three credit bureaus, that would allow TRW to use limited consumer data--not including credit-worthiness--to create lists for telemarketers and direct mail companies.

Cleveland-based TRW, which settled other credit-law citations last year, has agreed to the new settlement, the FTC said. It said the proposal still needs federal court approval.

State attorneys general have also been active in cracking down on allegedly inaccurate credit reports and a failure by firms to correct errors pointed out by consumers.

One startling case was a computer punching error by TRW that resulted in all taxpayers in Norwich, Vt., being listed on their credit reports as tax evaders.

Before the error was corrected, many of them were wrongly turned down for credit.

TRW, Trans Union and Equifax Inc. of Atlanta all have agreed with the states to reform their practices, ranging from record-collecting and making corrections to making it easier for consumers to see their credit reports.

In the new actions, the FTC said Trans Union sold lists of consumers based on credit ratings to clients for uses not intended under the Fair Credit Reporting Act.

The FTC also said Trans Union failed to check to see whether companies that requested credit checks actually made a firm offer of a loan to the credit-worthy consumers on the list.

In the TRW case, the FTC proposed that the credit agency include only basic identification information--such as name, address, telephone number and age--on lists it sells.