Opinion ID: 153014
Heading Depth: 3
Heading Rank: 3

Heading: Trans Union’s OFAC Advisor

Text: OFAC recognizes the need to ensure that its reports do not mistakenly associate innocent and unsuspecting persons with persons who are properly labeled “SDN.” Thus, OFAC cautions: “organizations involved in the credit reporting process 27 . . . . can make an important contribution by identifying sanctioned individuals in order to block their ability to use the U.S. financial system and to do business in the United States, but at the same time they should strive to protect consumers from erroneous or misleading information appearing on credit reports.” Department of Treasury, OFAC REGULATIONS FOR THE CREDIT REPORTING INDUSTRY, Apr. 13, 2004, http://www.treas.gov/offices/enforcement/ofac/regulations/fac cr.pdf (visited June 17, 2010). In September of 2002, Trans Union announced a “new product for USA Patriot Act Compliance” which it called: “OFAC Advisor.” Trans Union lauded the product as a “screening solution that provides credit grantors with a simple, automatic method for use in complying with new federal regulations as set forth in the USA PATRIOT Act.” J.A. 808. Trans Union refers to the SDN information that it reports from OFAC as an “OFAC Name Screen Alert.” See, e.g., J.A. 549, 28 570. The OFAC alert on Trans Union credit reports was developed by a team that included individuals from Trans Union’s business and systems units, as well as people from the legal and compliance sections. J.A. 311. In the normal course of developing any such product, a legal and compliance team do preliminary reviews to determine whether the product is “going to require permissible purpose, disclosure, [and/or have] contractual issues.” J.A. 312. After the product is developed, another final review is done by a legal team. Id. The information in Trans Union’s OFAC alert is provided to purchasers through a third party vendor called “Accuity.” J.A. 574, 809. Trans Union decided not to include the underlying information for its OFAC product in Trans Union’s own database. That database is called “CRONUS.” Trans Union decided to do that because “the only common denominator in all the entries [referring to OFAC’s SDN List] was a name.” J.A. 313. Unlike CRONUS, the entries in the 29 SDN List do not always include birth dates, addresses, or Social Security numbers that Trans Union routinely stores and relies on when associating a given consumer with information. Id. Having decided to use Accuity rather than maintain the information itself, Trans Union then marketed the OFAC information as part of a separate product called “OFAC Advisor.” J.A. 313-14, 808-09. Trans Union does not sell the OFAC alert information as a stand alone product; creditors must first purchase a Trans Union product such as credit report services and the OFAC alert is added to that product. Purchasers of Trans Union’s credit reports who wanted to subscribe to the OFAC Advisor were required to sign an addendum to their agreement with Trans Union in order to subscribe to the OFAC Advisor.20 Those who 20 That agreement states in relevant part: TransUnion agrees to make available as an add-on to consumer reports (including as an exclusion criteria on an input prescreen list, or an append to a prescreened list), and as an add-on to certain ancillary products offered by TransUnion from 30 purchased OFAC Advisor received one credit report from Trans Union with the OFAC information contained in it. However, Trans Union created the report from at least two separate sources: its own CRONUS database and information stored with Accuity. Trans Union requires creditors to provide at least a name and address of a consumer to retrieve information from CRONUS. J.A. 319. However, when retrieving OFAC information, Trans Union sends only a name to Accuity, even time to time an indicator whether the consumer’s name appears on the United States Department of Treasury Office of Foreign Asset Control File (“OFAC File”). The service is referred to as OFAC Advisor. Subscriber may receive the OFAC Advisor service under the following terms: . . . . In the event Subscriber obtains OFAC Advisor services from TransUnion in conjunction with Consumer Report or as an append to an ancillary service, Subscriber shall be solely responsible for taking any action that may be required by federal law as a result of a match to the OFAC File, and shall not deny or otherwise take any adverse action against any consumer based solely on TransUnion’s OFAC Advisor Services. J.A. 568. 31 though Trans Union may have more information about the person who is the subject of the inquiry. J.A. 318. Trans Union reports a “match” whenever names are “similar.” J.A. 180. Trans Union enters the information it receives from Accuity under the “SPECIAL MESSAGES” section appearing on its credit reports. Trans Union does no other comparison or due diligence with the data it receives from Accuity to attempt to match it to the consumer whose credit report is being furnished. Thus, Trans Union neither compares the OFAC information to other information about a given consumer already in its files, nor does it compare it to any information provided by the creditor/subscriber. J.A. 179. Moreover, once Trans Union receives the OFAC information it does not check or confirm its accuracy; in fact, Trans Union has a policy of never reinvestigating disputes involving OFAC alerts. J.A. 203-04. Trans Union merely “report[s] back that the input information is a match to the OFAC report.” J.A. 204. In a presentation that Trans Union gives to potential 32 subscribers to the OFAC Advisor, Trans Union states, “The U.S. Treasury Department requires that all institutions comply to insure that they are not extending credit or financial services to customers on the Office of Foreign Assets Control, OFAC list, of known terrorists, drug traffickers, and money launderers.” J.A. 155, 570. The presentation represents that Trans Union acts in “partnership” with Accuity and lauds the advantages of this product. J.A. 574. Trans Union describes Accuity as an“[i]ndustry leader in OFAC screening services.” Id. The slide boasts that the product is “[e]ndorsed” by the American Bankers Association and that it has “[b]roader and more comprehensive file coverage.” Id. Trans Union also claims its database has “[e]ffective matching logic” that will “[r]educe [the] number of false positives.” J.A. 574-75. As Cortez discovered, the information in the “SPECIAL MESSAGES” section of Trans Union’s credit reports is not included in credit reports that Trans Union sends to consumers on request. J.A. 157. The credit reports sent to consumers do 33 have a public records section, which contains information such as tax liens, judgments, or bankruptcies. That information is retrieved from CRONUS. J.A. 214. If Trans Union receives a dispute related to information in the public record section of a report, it investigates the dispute by either checking with its public record vendor or checking court records containing the disputed information. J.A. 199-200. Trans Union does not, however, conduct any investigation in response to disputes related to OFAC alerts. J.A. 201. It is not clear what Trans Union’s customer service representatives tell consumers who dispute OFAC alerts. According to one of Trans Union’s group managers who testified at the trial, the company’s policy is to refer consumers who complain about an OFAC alert to the Treasury Department. J.A. 205; 211. However, this did not occur in Cortez’s case. According to Trans Union, when the dealership first reviewed Cortez’s credit report, Trans Union could not block OFAC information from being included if Accuity determined 34 that her name matched a name on OFAC’s SDN List. J.A. 18283. This continued to be true at least through September of 2006. However, when this case came to trial, Trans Union had blocked several similar names and any “Sandra Cortez” was blocked from having an OFAC alert on her credit report. J.A. 183-84. The Fair Credit Reporting Act will be discussed in detail below. However, it is helpful at this point to note that the Act affords certain protections to consumers by regulating the disclosure and use of “consumer credit reports” as defined by the Act. Trans Union made an internal determination that the OFAC Advisor was not governed by the FCRA. According to Trans Union’s director of solutions and business development, “[a]fter review by our legal and compliance department they determined that this was not FCRA data.” J.A. 169.