On March 10, 2021, the Center joined an amicus brief in the Supreme Court of the United States in TransUnion v. Ramirez in support of class action plaintiffs who sued TransUnion because their credit reports were cross-referenced with a terrorist list based only on their names. The Housing Clinic of Jerome N. Frank Legal Services Organization at Yale Law School drafted the brief, which the Center joined along with the pro-democracy think tank Demos.
The underlying issue arose when TransUnion used a third-party contractor to cross-reference and mark credit reports with a list of Specially Designated Nationals (SDN) maintained by the Office of Foreign Asset Control (OFAC), which contains the names of individuals and companies with ties to terrorists and narcotics traffickers. The contractor did not include any factors besides names in its matching, excluding birth dates and other basic information. This led to many individuals being erroneously identified on their credit reports as terrorists and drug dealers.
The key question in the case is whether class members should be awarded damages when they did not all suffer the injury of being denied credit. The representative plaintiff was denied credit because his TransUnion credit report was incorrectly marked; however, the class included others who were not denied credit even though their credit reports were similarly marked. The jury in this case awarded each class member nearly $1,000 for violations of the Fair Credit Reporting Act and over $6,000 in punitive damages, for a total verdict of over $60 million.
The amicus brief emphasizes that the individuals whose credit reports were erroneously marked did suffer injuries and highlights the racial inequities of TransUnion’s OFAC SDN designations. The name-based matching disproportionately misidentifies people of color. Further, a marked credit report that perpetuates stereotypes can adversely affect a person’s health and achievement, and can prevent immigrants from progressing towards citizenship and achieving financial independence. Lastly, those with marked credit reports are impeded from making basic purchases like cars and homes that rely on access to credit.
Credit reporting agencies — especially the Big Three (TransUnion, Equifax, and Experian) — have enormous power in determining whether individuals can buy a car, finance their education, or rent an apartment. Here, TransUnion’s failure to take basic precautions had serious consequences that perpetuated racial stereotypes and harmed the financial lives of numerous individuals.
The Center is grateful to have had the opportunity to join the Jerome Frank Clinic and Demos in highlighting this issue for the Court.