Cortez v. Trans Union, LLC Decision

Cortez v. Trans Union, LLC, 08-2465

Third Circuit Court of Appeals Affirms Punitive Damages Verdict Against Trans Union Credit Reporting Agency for Misreporting Woman as Being on Government’s OFAC List—Finding Its Conduct “Reprehensible”

Court Finds Credit Reporting Agencies Must Treat Government OFAC Data Same as Regular Credit Information

Philadelphia, PA, August 17, 2010

On Friday, August 13, 2010, the United States Court of Appeals for the Third Circuit upheld a punitive damages verdict against the Trans Union credit reporting agency in a fair credit reporting case based upon Trans Union’s misreporting an innocent woman as being on the U.S. Treasury Department’s “OFAC” list. The 91 page precedential decision is the first of its kind in cases brought under the Fair Credit Reporting Act which involve the reporting of such data.

Trans Union, LLC is one of the country’s “Big Three” credit reporting agencies, and has one of its main operations in Crum Lynne, Pennsylvania. Trans Union reported information belonging to a suspected narcotics trafficker named Quintero, who was on the Treasury’s “OFAC List”, on consumer-plaintiff Sandra Cortez’s credit report, and failed to fix the serious error despite several disputes. The jury awarded $50,000 in emotional distress damages, and $750,000 in punitive damages, which the trial court reduced to $100,000.

The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) created the OFAC list to identify suspected terrorists and narcotics traffickers, and prevent them from obtaining credit from American businesses and lenders. After September 11, 2001, the Patriot Act issued new rules and obligations regarding lenders’ use of the OFAC list. Lenders face serious penalties and fines if they extend credit to anyone on the OFAC list. In connection with the credit reports they sell, and for an additional fee, credit reporting agencies such as Trans Union sell lenders information regarding whether an applicant is on the OFAC list.

The decision is significant for several reasons. First, it is the first decision by any appellate court to find that the sale of OFAC data is covered by the Fair Credit Reporting Act, and that credit reporting agencies must observe the same duties they are required to follow with ordinary credit data when selling OFAC date. The information must be reported with “maximum possible accuracy”, it must be disclosed to the consumer that it is being reported about, and if the consumer disputes such data, the credit reporting agency must investigate that dispute and remove the information from the consumer’s credit report if inaccurate.

Second, if a credit reporting agency fails to observe these duties as Trans Union did it may be liable for punitive damages. Trans Union’s deliberate failure to comply with these duties led the Third Circuit to find that its conduct was “reprehensible” and willful, and that trial court’s award of $100,000 in punitive damages did not even begin to approach the constitutional limit for cases like this one.

Plaintiff Sandra Cortez was represented by the law firm of Francis Mailman Soumilas, P.C. ( Trans Union was represented by the law firm of Kogan, Trichon & Wertheimer, P.C. Both law firms are located in Philadelphia, PA.

The decision of Cortez v. Trans Union, LLC, Civ. No. 08-2465, 08-2466 was authored by Chief Judge Theodore McKee.

Information regarding the case and verdict may be obtained by contacting Jim Francis, Mark Mailman or John Soumilas at the address and telephone number listed above, or by emailing any inquiries to


Full text of Cortez v. Trans Union, LLC, 08-2465