Court Makes It Tougher to Sue Credit Bureaus

The Supreme Court made it harder Tuesday for victims of “identity theft” to sue credit-reporting bureaus for their mistakes, ruling that these legal claims must be filed within two years after the mistake occurred--even if the victim does not learn of the error in that time.

The 9-0 decision blocks a lawsuit against TRW by a Southern California woman whose good credit rating was stolen and used by a Las Vegas impostor with a similar name.

Disappointed consumer advocates said the court’s strict deadline takes much of the pressure off the three major credit-reporting bureaus to be more diligent.

They say about half a million people have been victims of frauds based on stolen credit information. Often, they first learn of the problem when they receive overdue bills for purchases that were made in their name by someone they do not know.

But a spokesman for Experian, which took over TRW’s credit reporting operations, said consumers must play a role in policing in their own files.

“This basically reaffirms what we have been telling consumers. They need to periodically check their credit reports by calling or going online,” said Donald Girard, director of public relations for Experian, which is based in Orange, Calif. “If they find an error, we will act quickly to correct it.”

The other giant credit-reporting companies are Equifax and Trans Union. Collectively, the three are believed to have files on 190 million Americans. Banks, stores and credit card companies rely on information from the credit bureaus when extending credit to customers.

It is a crime under federal and California laws to pose as another person to obtain credit or make purchases.

But separately, the Fair Credit Reporting Act allows consumers to sue for damages if they are injured because of a mistake or negligence by a credit-reporting agency.

The law says these claims must be filed “within two years from the date on which the liability arises.” The case decided Tuesday turned on the meaning of that phrase.

It began in June 1993, when Adelaide Andrews visited a doctor’s office in Santa Monica. She filled out a new patient form that asked for her Social Security number. The receptionist, Andrea Andrews, copied the number and shortly afterward moved to Las Vegas, according to court records.

There, she used Adelaide Andrews’ Social Security number to open accounts for herself. TRW did not notice the discrepancy in their first names or birth dates and reported her as having good credit between June and September 1994.

In May 1995, Adelaide Andrews discovered the problem when she sought to refinance her home mortgage. Her credit report listed delinquent accounts in Las Vegas. TRW eventually corrected her file, although Andrews says the mistake resulted in her paying higher rates for a loan.

On Oct. 21, 1996, Andrews sued TRW in federal court in Los Angeles. The company maintained that her suit should have been thrown out because it came too late. The Supreme Court agreed Tuesday.

Justice Ruth Bader Ginsburg, writing for the court, parsed the words of the statute closely. After saying claims must be filed within two years, it says this deadline can be waived in cases where the company “willfully misrepresented” information about a consumer.

Since Andrews claimed that TRW had made a careless mistake, and not a deliberate misstatement, her suit is governed by the two-year deadline set in the law.

Judges have no authority to ignore the deadline set by Congress, even if it seems more fair to do so in some instances, Ginsburg said in TRW vs. Andrews, 00-1045.

The decision reverses the U.S. 9th Circuit Court of Appeals, which said the two-year deadline should have been measured from the time Andrews discovered TRW’s mistake.

Andrew Ryan Henderson, a Los Angeles lawyer who represented Andrews, called the decision “terrible for victims of identity theft. In a practical sense, this will let the credit reporting agencies off scot-free,” he said.

Ed Mierzwinski of US PIRG, a public interest research group, called on Congress to reverse the decision. “By limiting a consumer’s right to sue credit bureaus, the court encourages an already mistake-ridden credit reporting system to keep up the bad work,” he said. “This is the fastest growing white-collar crime, but a significant number of victims don’t find out about the theft of their identity for two years.”

A Federal Trade Commission study estimated that the average victim learns of the problem within 15 months. Some discover a problem when they seek new credit; others learn of it when they receive a notice of unpaid bills.

In May, a report by CAL PIRG, a California public interest group, said the average victim of identity theft has $18,000 in fraudulent charges on his or her credit report, and spends two years trying to straighten out the problem.

Girard, the spokesman for Experian, urged consumers to obtain their credit reports. The charge is $8.50, he said. The company’s Web site is https://www.creditexpert.com.