First American Unit Settles Credit Charges

A division of Santa Ana-based First American Financial Corp. agreed Wednesday to settle U.S. Federal Trade Commission allegations that it didn’t give consumers a fair chance to dispute inaccurate credit reports.

The FTC charged that First American Credco Inc., the largest U.S. provider of specialty credit reports, routinely failed to investigate disputed credit information as federal law requires.

On the “rare occasions” when Credco launched an investigation, it failed to correct inaccurate or obsolete information in its files, the FTC said.

Under terms of the settlement, the FTC said it agreed not to disclose details of any cases or problems caused.

The dispute involves Credco’s “instant merge” reports, which use computers to give mortgage companies, automobile dealers and other lenders combined information from the three national credit bureaus, Equifax Inc., Experian Corp., and Trans Union Corp.

Credco spokesman Per Gothe said the settlement won’t force any changes in the company’s business practices. The San Diego-based company, along with many others in the industry, in recent years began using an automated consumer dispute verification system that allows it to electronically contact creditors about disputes.

“We vigorously deny the allegations, but rather than spend another three years in court, we decided to settle the matter,” Gothe said. The company has been cooperating with the FTC’s investigation for three years, he said.

Before setting up the automated system, Credco generally referred complaints to the three credit bureaus, which maintain credit history files on individuals.

The settlement requires San Diego-based Credco and its corporate parent, First American Real Estate Solutions LLC, to investigate all complaints, notify the company that furnishes the information of the dispute and promptly notify consumers of their rights after an investigation.